(Routledge Studies in Entrepreneurship) Evgueni Vinogradov, Birgit Leick, Djamchid Assadi - Digital Entrepreneurship and The Sharing Economy-Routledge (2021)

i
Digital Entrepreneurship and the

Sharing Economy
The digital and increasingly digitised world is shaped by the interplay of

new technological opportunities and ubiquitous societal trends. Both lead
to drastic changes facing artificial intelligence (AI), cryptocurrencies and
block-chain technologies, internet of things, technology-based surveil-
lance, and other disruptive innovations. These developments facilitate the
rise of the sharing economy and open for a variety of new entrepreneurial
opportunities that businesses can take up. The novel entrepreneurial
opportunities, however, imply a paradigmatic shift in the understanding
of entrepreneurship.
This book combines digital entrepreneurship with the sharing
economy. It presents cutting-edge research for scholars and practitioners
interested in either one of the topics –digital entrepreneurship or sharing
economy –or their connection. The book addresses three major ways to
become entrepreneurial in the sharing economy: digital entrepreneurship
through creating novel sharing- economy platforms; technology entre-
preneurship through the exploitation of sharing- economy platforms;
and business model innovation or business model change influenced by
the sharing economy. The book also highlights governance questions on
digital entrepreneurship in the sharing economy, which are highly rele-
vant for businesses, the economy, and society.
The book will be of interest to researchers, academics, and students in
the field of business and entrepreneurship, with a special focus on digital
entrepreneurship.
Evgueni Vinogradov is a senior researcher and former research director at

Nordland Research Institute, Norway.
Birgit Leick is an associate professor in Innovation and Entrepreneurship

in the School of Business at University of South-Eastern Norway, Norway.
Djamchid Assadi is a professor of Digital and Sharing Economy and

Strategy at Burgundy School of Business (BSB), France.
ii
Routledge Studies in Entrepreneurship
This series extends the meaning and scope of entrepreneurship by cap-

turing new research and enquiry on economic, social, cultural and
personal value creation. Entrepreneurship as value creation represents
the endeavours of innovative people and organisations in creative envir-
onments that open up opportunities for developing new products, new
services, new firms and new forms of policy making in different environ-
ments seeking sustainable economic growth and social development. In
setting this objective the series includes books which cover a diverse range
of conceptual, empirical and scholarly topics that both inform the field
and push the boundaries of entrepreneurship.
Contextualizing Entrepreneurship Theory

Ted Baker and Friederike Welter
Entrepreneurial Marketing and International New Ventures

Antecedents, Elements and Outcomes
Edited by Izabela Kowalik
Entrepreneurship, Dyslexia, and Education

Research, Principles and Practice
Edited by Dr Barbara Pavey, Dr Neil Alexander-Passe, and
Dr Margaret Meehan
Entrepreneurship in Spain
A History
Edited by Juan Manuel Matés-Barco and
Leonardo Caruana de las Cagigas
Women and Global Entrepreneurship

Contextualising Everyday Experiences
Edited by Maura McAdam and James A. Cunningham
Digital Entrepreneurship and the Sharing Economy

Edited by Evgueni Vinogradov, Birgit Leick, and Djamchid Assadi
iii
Digital Entrepreneurship and

the Sharing Economy
Edited by
Evgueni Vinogradov, Birgit Leick,
and Djamchid Assadi
iv
First published 2022

by Routledge
605 Third Avenue, New York, NY 10158
and by Routledge
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Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2022 Taylor & Francis
The right of Evgueni Vinogradov, Birgit Leick, and Djamchid Assadi to be
identified as the authors of the editorial material, and of the authors for
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and 78 of the Copyright, Designs and Patents Act 1988.
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Library of Congress Cataloging-in-Publication Data
Names: Vinogradov, Evgueni, editor. | Leick, Birgit, 1975– editor. |
Assadi, Djamchid editor.
Title: Digital entrepreneurship and the sharing economy /
edited by Evgueni Vinogradov, Birgit Leick, and Djamchid Assadi.
Description: 1 Edition. | New York : Routledge, 2021. |
Series: Routledge studies in entrepreneurship |
Includes bibliographical references and index.
Identifiers: LCCN 2021002122 (print) | LCCN 2021002123 (ebook) |
ISBN 9780367472405 (hardback) | ISBN 9781003036821 (ebook)
Subjects: LCSH: Information technology–Economic aspects. |
Entrepreneurship. | Cooperation.
Classification: LCC HC79.I55 D546 2021 (print) |
LCC HC79.I55 (ebook) | DDC 303.48/33–dc23
LC record available at https://lccn.loc.gov/2021002122
LC ebook record available at https://lccn.loc.gov/2021002123
ISBN: 978-0-367-47240-5 (hbk)
ISBN: 978-1-032-03814-8 (pbk)
ISBN: 978-1-003-03682-1 (ebk)
Typeset in Sabon
by Newgen Publishing UK
v
Dedicated to my uncle Igor who has inspired and enabled me

to follow the research career.
Evgueni Vinogradov
To my family: Edith and Wolfgang, Annette and Roland,

Michael, Rosa and Carla. In honor of my mentor Anke.
Birgit Leick
To my supportive family, Goli, Anahita and Cyrus. To my

students who support my edited and written books and to
my institution, BSB, who supports my interest in books.
Djamchid Assadi
vi
vi
Contents
List of Figures x
List of Tables xi
Notes on Contributors xii
Foreword xvii
N O R R I S K R UE GE R
Introduction 1
E V G U E N I V I NO GRA DO V, B IRGIT L E ICK, A N D DJAMC HID ASSADI
PART I
Conceptualisation of Digital Entrepreneurship
and Sharing Economy 13
1 Regional Sharing-Economy Entrepreneurs and the

Diversity of Their Business Models 15
B I R G I T L E I C K, ME H TA P A L DO GAN E KL UN D,
S U S A N N E G RE TZIN GE R, AN D A N N A MARIE DY HR U LR IC H
2 Digital Subsistence Entrepreneurs in Developed

Countries: Opportunities and Limitations of
Peer-to-Peer Platforms 34
E VA D E L A C RO IX, FL O RE N CE B E N O IT- M O RE AU , AND
B É ATR I C E PARGUE L
3 Digital Entrepreneurship across P2P, B2C and B2B

Contexts: A Bibliometric Analysis Deconstructing
Extant Research on Sharing Economy Business Models 52
K A R L J O A C H IM B RE UN IG, H E N RIK JO H A N SEN, AND
J Ø R G E N R Ø STE KRISTIAN SE N
vi
viii Contents
4 The Sharing Economy as an Entrepreneurial Evolution
of Electronic Commerce 72
A N D R E A G E ISSIN GE R, CH RISTO FE R L AURE LL,
C H R I S TI N A Ö B E RG, AN D CH RISTIAN SAN DS T R ÖM
PART II
Digital Entrepreneurship and Sharing Economy:
Various Cases and Contexts 89
5 Asymmetries of Local Economic Impacts of Digital

Entrepreneurship in Denmark: The Case of Airbnb 91
J I E Z H A N G A N D N IN O JAVAKH ISH VIL I- L ARS EN
6 How Can Digital Entrepreneurship Address Social

Issues? The Case of EkoHarita in Fighting Ecological
Disruption 109
Z E Y N E P Ö Z S O Y AN D B E YZA O B A
7 Fostering Open Innovation in Digital Startups: An

Explorative Study of Norwegian Coworking Spaces 127
A N H N G U Y E N DUC AN D SIMO DE SP E RIN DÈ
8 Gigging with an MBA: When Elite Workers Join the

“Gig Economy for Finance People” 145
A L E X A N D R EA J. RAVE N E L L E , E RICA JAN KO , AND
K E N C A I K O WAL SKI
9 Coworking Spaces in the Sharing Economy:

Examples from an Emerging Country 160
O Z G E K I R E Z L I AN D M.G. SE RA P ATAKAN
PART III
Governance and Legal Structure 179
10 The EU Legal-Regulatory Framework for Digital

Entrepreneurs in the Sharing Economy 181
E M I LY M . W E ITZE N B O E CK
xi
Contents ix
11 U.S. Securities Crowdfunding: A Way to Economic
Inclusion for Low-Income Entrepreneurs? 195
J O A N M A C L EO D H E MIN WAY
Index 214
x
Figures
.1 The theoretical dimensions of the concepts

1 22
3.1 Development of publications per year for the period
1997–2019 60
3.2 VOSviewer map with co-occurrence analysis 60
3.3 VOSviewer map with co-citation analysis 61
3.4 VOSviewer map with bibliographic coupling analysis 61
4.1 Aggregated frequency of user-generated posts published
referring to sharing, social and e-commerce platforms
between April 2016 and March 2018 80
4.2 Data flow over the studied time period by sector and
commerce 83
5.1 Total socioeconomic effects of Airbnb per listing by type
of region (2017) 105
7.1 The OICS model on open innovation in coworking spaces 141
xi
Tables
1.1 The four sharing-economy entrepreneurs and their

business models –overview 26
3.1 Compilation of findings according to the business model
dimensions of P2P, B2C and B2B 67
4.1 Definitions and characterising traits of e-commerce, social
commerce and sharing commerce 76
4.2 Collected published user-generated posts per social media
platform 77
4.3 Identified platforms in sharing, social and e-commerce and
their associated frequency of user-generated posts 79
4.4 Distribution of identified sectors and their associated
user-generated posts for sharing, social and e-commerce 81
5.1 Number of listings, prices, length of stay, party size and
estimated bed nights of Airbnb 98
5.2 Number of overnight stays at Airbnb in 2017 by cities and
regions 99
5.3 Tourism revenue at Airbnb in 2017 by cities and regions 99
5.4 Airbnb employment effects in cities and the regions 102
5.5 Airbnb income effects in cities and the regions 103
5.6 Airbnb effect on income taxes and value-added taxes
(VAT) in cities and the regions 104
6.1 Interviews and interviewees 113
7.1 Investigated coworking spaces 132
7.2 Survey responses to the four pillars of open innovation in
digital startups 134
7.3 The impact of coworking spaces on different indicators of
open innovation 136
7.4 The coworking space elements that matters 139
8.1 Key categories of worker interest in elite gig work 154
9.1 General corporate information about the coworking spaces 167
9.2 Benefits of the coworking spaces 169
xi
Contributors
Editors
Evgueni Vinogradov, Nordland Research Institute, 8049 Bodø, Norway.
Evgueni Vinogradov, PhD, is a senior researcher and former research
director at Nordland Research Institute. Evgueni’s research focuses on
entrepreneurship, innovation, sharing economy, and regional devel-
opment. The most important theoretical publications are devoted to
sharing economy, immigrant-owned businesses, the role of national cul-
ture in entrepreneurship, and survival of newly established businesses.
He has participated and leaded several empirical research projects and
evaluation studies. Evgueni Vinogradov has been involved in teaching
entrepreneurship both in Norway and in Norwegian educational
programs conducted in Ukraine and Russia. Most of his research is
based on quantitative methods including agent-based modelling.
Birgit Leick, University of South-Eastern Norway, School of Business,
3800 Bø, Norway. Birgit Leick is a business economist and eco-
nomic geographer. Birgit received a PhD in business economics from
University of Technology Freiberg in Germany in 2006 and a habilita-
tion degree in economic geography from the University of Bayreuth in
2018. She is also professor for innovation and regional development in
Norway. Currently, Birgit works as Associate Professor in Innovation
and Entrepreneurship in the School of Business of University of South-
Eastern Norway. Her most important research foci are the nexus
between enterprises and regional development; she has been working
and publishing part of this research on the sharing economy and
regional economic development. Besides, Birgit is interested in institu-
tional entrepreneurship and rural entrepreneurs in creative industries.
Birgit will be organising a large track session on the sharing economy
and entrepreneurship for EURAM Annual Conference 2020 in Dublin,
Ireland.
Djamchid Assadi, Burgundy School of Business (BSB), France. Djamchid
teaches and researches at Group Burgundy School of Business (BSB)
in Dijon, France. He authored several books in French and published
many scholarly papers and professional articles in English and French.
xi
Notes on Contributors xiii

He is also member of several editorial boards publishing journal in
English and French and has delivered many lectures on business and
marketing strategies. His research concerns the impact of techno-
logical and social innovations on the reduction of transaction costs
and the formation of the spontaneous order among peer without inter-
mediation of the political organs. He widely works on the P2P Sharing
Economy, e.g., studying crowdfunding, FinTechs, mobile telephony,
and the information system. Djamchid Assadi is no less interested
in the impact of non-economic factors such as music, religion, and
storytelling on buying behaviour and strategic behaviour. With ten
colleagues from five countries, Djamchid will be chairing a large track
session on the sharing economy and entrepreneurship for EURAM
Annual Conference 2020 in Dublin, Ireland.
Contributors
M.G. Serap Atakan, Istanbul Bilgi University, Faculty of Business,
Turkey. Serap Atakan serves as an associate professor of marketing at
the Faculty of Business of Istanbul Bilgi University in Istanbul, Turkey.
Her current research interests are coworking spaces in the sharing
economy, crowdfunding, and global marketing.
Florence Benoit-Moreau, Université Dauphine- PSL (Paris Sciences et
Lettres), France. Florence Benoit-Moreau currently serves as Associate
Professor in marketing in the Marketing & Strategy department. Her
current research interests address the impact of marketing strategies
on society, through topics such as sustainable and collaborative con-
sumption or gender stereotypes.
Karl Joachim Breunig, Oslo Business School, Oslo Metropolitan
University –OsloMet, Norway, is a full professor of Strategic
Management, and heads the research group on Digital Innovation
and Strategic Competence in Organizations (DISCO). Prof. Breunig’s
research concentrates on the interception of strategy-and innovation
theory, involving topics such as service and business model innovation,
as well as digitalisation in knowledge intensive firms.
Eva Delacroix, Université Dauphine- PSL (Paris Sciences et Lettres),
France. Eva Delacroix currently serves as Associate Professor in
marketing in the Marketing & Strategy department. Her current
research deals with vulnerable consumers, low-income entrepreneurs,
and gender stereotypes in the market.
Anh Nguyen Duc, University of South Eastern Norway (USN), Business
School, Department of Business and IT, Norway. Anh Nguyen-Duc is
an associate professor in Information Technology and Science at USN.
His current research interests are software startups, empirical software
engineering, and open source software.
vxi
xiv Notes on Contributors

Mehtap Aldogan Eklund, University of Wisconsin-La Crosse, Department
of Accountancy, USA. Her research interests are corporate govern-
ance, executive compensation, accounting, auditing, sustainability,
and entrepreneurship.
Andrea Geissinger, Örebro University School of Business, Sweden, and
The Ratio Institute, Sweden. Andrea Geissinger is a PhD student
at Örebro University and also associated with The Ratio Institute.
Her research focuses on the specific societal challenges and oppor-
tunities that arise out of the sharing economy for individuals and
organisations alike.
Susanne Gretzinger is an associate professor (PhD) in the Department
of Entrepreneurship and Relationship Management at the University
of Southern Denmark. Her research interest is in the area of Business
Marketing and Entrepreneurship. Her current research projects are
brokerage and its impact on the development of regional networks
and firm performance; how digital entrepreneurship and IoT (internet
of things) are re-shaping the networked environment of the firm and
the enabler/driver of firm performance.
Joan MacLeod Heminway, The University of Tennessee College of
Law, USA. Joan MacLeod Heminway is the Rick Rose Distinguished
Professor of Law and Interim Director of the Institute for Professional
Leadership at The University of Tennessee College of Law in Knoxville,
Tennessee, USA. Her research primarily focuses on questions at the
intersection of business governance and finance, with a special emphasis
on disclosure regulation impacting entrepreneurial and small business
finance (including crowdfunding), securities fraud, and insider trading.
Erica Janko, University of North Carolina at Chapel Hill, Department of
Sociology, USA. Erica Janko is a graduate student in the Department
of Sociology at the University of Carolina at Chapel Hill. Her current
research interests include collective action and consciousness forma-
tion among precarious workers and structures of inequality in the cre-
ative industries.
Nino Javakhishvili-Larsen is a senior researcher at Centre for Regional
and Tourism Research (CRT), in Denmark. She is a socio-economic
geographer, specialising in local economic development of urban,
rural, and peripheral regions, local labour markets, and human cap-
ital, as well as developing quantitative methods and models within the
area of her research.
Henrik Johansen, Oslo Business School, Oslo Metropolitan University –
OsloMet, Norway, is currently working as an associate at the Norway
office in the consulting firm KPMG. Mr. Johansen graduated with a
MSc in Business Administration from Oslo Business School, Oslo,
Metropolitan University –OsloMet in 2020.
v
x
Notes on Contributors xv
Ozge Kirezli, Yeditepe University, Faculty of Economy and Administrative
Sciences, Turkey. Ozge Kirezli currently serves as an assistant professor
in Marketing at the Business Administration Department, Yeditepe
University, Turkey. Her current research interests are value creation
in the sharing economy, coworking spaces, and abnormal consumer
behaviour.
Ken Cai Kowalski, University of North Carolina at Chapel Hill,
Department of Sociology, USA. Ken Cai Kowalski is currently a PhD
student in the Department of Sociology at the University of North
Carolina at Chapel Hill. His research interests include political culture
and its intersections with the futures of work.
Jørgen Røste Kristiansen, Oslo Business School, Oslo Metropolitan
University –OsloMet, Norway, is currently working as an associate
at the Norway office in the consulting firm KPMG. Mr Kristiansen
graduated with a MSc in Business Administration from Oslo Business
School, Oslo, Metropolitan University –OsloMet in 2020.
Christofer Laurell, KTH Royal Institute of Technology, Department
of Industrial Economics and Management Sustainability, Industrial
Dynamics and Entrepreneurship (SIDE) Division, Sweden. Christofer
Laurell is Associate Professor in Industrial Economics and Management
with specialisation in Technological Innovation at KTH Royal
Institute of Technology and the Department of Industrial Economics
and Management. His research interests are focused on institutional
pressures created by digitalisation and their implications for a broad
range of sectors of the economy.
Birgit Leick, University of South- Eastern Norway, Business School,
Department of Business and IT, Norway. Birgit Leick currently serves
as Associate Professor in Innovation and Entrepreneurship in the
School of Business, University of South-Eastern Norway. Her current
research interests are entrepreneurship in the creative industries,
digital entrepreneurs and the sharing economy, and regional economic
development.
Beyza Oba, Istanbul Bilgi University, Business Administration Faculty,
Department of Business, Turkey. Beyza Oba currently serves as Professor
in Organization Studies in the Faculty of Business Administration,
Istanbul Bilgi University. Her current research interests are alternative
organisations, the sharing economy, and gender diversity.
Christina Öberg, Örebro University School of Business, Sweden, and
The Ratio Institute, Sweden. Christina Öberg is a professor/chair in
marketing at Örebro University and also associated with The Ratio
Institute and Leeds University. Her research interests include digital-
isation and new ways to pursue business, mergers and acquisitions,
and contextual change and its impact on firm strategising.
xvi
xvi Notes on Contributors

Zeynep Özsoy, currently serves as Associate Professor in the Business
Administration Department, Istanbul Bilgi University, Faculty of
Business, Turkey. Her current research interests include social entre-
preneurship, diverse economies, and diversity management.
Béatrice Parguel, Université Dauphine-PSL (Paris Sciences et Lettres),
France. Béatrice Parguel currently serves as a full CNRS researcher in
marketing and innovation management. Her current research interests
include pro-environmental behaviours consumption, individual cre-
ativity, and entrepreneurship.
Alexandrea J. Ravenelle, University of North Carolina at Chapel Hill,
Department of Sociology, USA. Alexandrea J. Ravenelle is Assistant
Professor of Sociology at the University of North Carolina at Chapel
Hill. Her research interests include the long-term effects of the COVID-
19 pandemic on precarious workers, and the impact of high-status gig
work and sudden platform closings on gig economy entrepreneurs.
Christian Sandström, Jönköping International Business School, Sweden,
and The Ratio Institute, Sweden. Christian Sandström is Senior
Associate Professor at Jönköping International Business School and
affiliated with the Ratio Institute. His research concerns the interplay
between digitalisation, institutional change, and firm strategies.
Simode Sperinde, NOI Techpark, Italy. Simode Sperindè is an innov-
ation management consultant at the innovation centre and technology
transfer. His current research interests are innovation management
and sharing economy.
Anna Marie Dyhr Ulrich, University of Southern Denmark (SDU),
Department of Entrepreneurship and Relationship Management,
Denmark. Anna Marie Dyhr Ulrich attends a position as Associate
Professor in BtB Marketing in the Department of Entrepreneurship
and Relationship Management at the SDU campus in Sønderborg,
Denmark. Her research interests are within B2B Marketing,
International Marketing, IOT, and Relationship Marketing.
Emily M. Weitzenboeck, Oslo Business School, Faculty of Social
Sciences, Oslo Metropolitan University –OsloMet, Norway. Emily
Weitzenboeck is Associate Professor of law at the Oslo Business School,
OsloMet. Her current research interests are electronic commerce law
and legal issues related to new business models, digitalisation, Big
Data, machine learning, algorithms, as well as privacy and data pro-
tection law.
Jie Zhang, Centre for Regional and Tourism Research (CRT), Denmark.
Jie Zhang is a senior researcher at CRT. Her current research interests
are development of tourism satellite accounts, assessment of tourism
impact on regional economies, method development on tourism des-
tination and economic and environmental effects of tourism.
xvi
Foreword
There has been digital entrepreneurship since the birth of the web. There
has been a sharing economy since humans began.
Their intersection seems an obvious and immediate phenomenon but
as this volume shows, it is not quite that simple. While digital entrepre-
neurship has in many ways accelerated the sharing economy, it has also
complicated matters in perhaps surprising ways. This volume does a nice
job of introducing us to some of those surprises.
The editors provide a good introduction and overview of the disparate
chapters on this very important topic. The diverse case studies are par-
ticularly welcome. If you are interested in this topic, you will find at least
one chapter of particular interest. In fact, I hope that readers will find at
least one chapter to cite in their own work.
I am pleased that the editors grounded the introduction in my two
favourite definitions in this arena: Sussan and Acs (2017) and Giones and
Brem (also 2017). With all the different (and occasionally odd) definitions
in the field, the editors definitely got off on the right foot.
Entrepreneurs of any stripe operate in a world of ecosystems and
digital entrepreneurs in the sharing economy are no different. While the
term ‘ecosystem’ is much- overworked (and much under- defined) it is
absolutely essential to understand the phenomena under study here and
these chapters reflect that consistently.
For example, an under-studied element of entrepreneurial ecosystems
is ecosystem governance. While too often neglected, governance of
ecosystems is critical for participants so I was pleased to see implicit,
even explicit consideration provided across these chapters as well as the
focus for the last set of chapters.
When I read a book of chapters such as this, I am sometimes hard
pressed to understand the flow of the chapters. I had no such problem
here. It is a simple thing but I am nonetheless pleased that Professors
Vinogradov, Leick, and Assadi have done so.
xvii 1
newgenprepdf
xviii Foreword
I suspect that multiple chapters in this volume will be cited. In several,
I also suspect that the authors have only just begun their inquiries and
I look forward to future work from them. I also look forward to future
edited volumes from these editors.
Norris Krueger, PhD; Boise, Idaho USA, December 2020
1
Introduction
Evgueni Vinogradov, Birgit Leick, and
Djamchid Assadi
The concept of the sharing economy has become increasingly popular in

the past few decades in response to major technology and societal shifts.
As the digital revolution progresses, a dynamic change associated with
the sharing economy is altering the way how transactions between indi-
viduals, businesses and organisations are shaped and delivered. In fact,
the rising importance of digitisation-associated tools, products, and ser-
vices is linked to a revolution in that new socio-technical opportunities
for shared transactions are enabled that did not exist before. Conversely,
this shift also poses potentially drastic changes for the society to grapple
with, as the new innovative technologies permeate products and ser-
vices as well as entire business models through, e.g., artificial intelligence
(AI), cryptocurrencies, block-chain technologies, internet of things, and
technology-based surveillance.
There is an ongoing academic and political debate regarding the
origins, development, functionality, and contributions of the sharing
economy in such a rapidly digitising world, particularly about sustainable
consumption and waste management issues. Shared transactions and the
sharing economy, respectively, are not a new phenomenon because pre-
vious sharing activities were observed between peer-to-peer (P2P) groups
such as families and friends (Frenken & Schor, 2017). However, what is
new and adds to the contemporary debate is the disruptive ‘renaissance’
of shared transactions resulting from the use of Web 2.0-based social
media. In this regard, new models of the sharing economy are emerging
which close distance-related gaps between actors and allow more and
other actors, who may otherwise have been distanced by conventional
communication modes (such as simple digital exchanges, telecommunica-
tion, retail transaction, road or air transportation), to interact. Hence, the
more complex digitisation further reduces transaction costs and thereby
increases the efficacy of sharing-economy transactions among peers where
distance-related costs become less important (Surowiecki, 2004; McAfee,
2006; Tapscott & Williams, 2007; Ashta & Assadi, 2009).
Possibly the most significant impact of this development is the fact
that the digitalisation of the sharing economy enables a wider circle of
actors a bigger reach of and access to both local and global markets.
2
2 Evgueni Vinogradov et al.

In this respect, digitisation brings about a different meaning to ‘local’.
Whereas shared transactions among peers in the original understanding
(Frenken & Schor, 2017) took place through a physical and local face-to-
face meeting platform, the digitised sharing economy allows borderless
transaction-based activities on P2P digitised platforms on various levels,
ranging from the local to the national and international-global level. The
border in this context moves beyond land-based and physical curtilages
towards digital- based limitations, introducing multiple and varying
contextual factors to the connectivity and accessibility of the sharing
economy.
Definitions of the Sharing Economy in This Book

This book follows the idea that the sharing economy relies in today’s
digital and digitised world on multi-sided platform-based intermediation
(and monetisation) of assets and service provision. In this respect, we
identify two key streams of individuals related to the assets and services
provided through the platform-based sharing economy: those who have
an asset, that is, commodity or service, to offer which can be exploited
through sharing via the platforms (asset owners or providers, representing
the supply side); and those who use the underutilised assets from the
asset owners and providers (asset users, representing the demand side).
This perspective is derived from the definition by Botsman and Rogers
(2010, pp. 159–160) of the sharing economy, as “traditional sharing,
bartering, lending, trading, renting, gifting, and swapping, redefined
through technology and peer communities”. In addition, we draw from
the view expressed by de Rivera et al. (2017, p.12) that the sharing
economy involves providers and consumers of goods and services as well
as platforms defined as websites and apps that “enable, facilitate and
mediate exchanges and sharing between peers to create alternate and
stable marketplaces”. The latter definition embraces the criterion that the
platform-based sharing economy is a multi-sided market.
No matter how it is defined, it is a matter-of-fact nowadays that the
sharing economy represents a large and growing economic sector, which
is expected to grow from 4 billion in 2015 to 80 billion Euro by 2025
(PricewaterhouseCoopers, 2016). The sharing economy encompasses a
continuum of activities such as accommodation, lodging, and properties
(Airbnb, HomeAway, Love Home Swap), car-sharing (Turo, Getaround),
ride-sharing (BlaBlaCar), ride-hailing (Lyft), crowd-shipping (PiggyBee),
tutorials (Superprof), multi- services (TaskRabbit), and crowdfunding
(Kickstarter and Kiva). These platforms and the associated business
models involve different types of actors, businesses, and organisations,
ranging from profit-oriented multinationals, for instance, Airbnb and
Uber, and cooperatives such as Couchsharing and Makerspace, to not-
for-profit organisations (for example, Kiva).
3
Introduction 3
The Transition to Digital Entrepreneurship

It is commonly acknowledged in academic research and managerial
practice that entrepreneurship is an essential aspect of greater economic
development and societal progression. The impact of rapid digitisation in
contemporary society adds a new dimension to this activity –one that is
moving beyond the pace of the everyday reality of economic relationships
and entrepreneurial activities. Hence, the potential and dynamism of the
digitally driven sharing economy through platforms enables both the
entrepreneurial expansion and new forms of entrepreneurship, which is
shifting the frontier in entrepreneurship and calls for the empirical inte-
gration of this new development. More precisely, in this book, it is argued
that it is time to bring the new ideas and connections between digital
entrepreneurship and the sharing economy to the fore.
Digital entrepreneurship is defined here in line with the literature that
emphasises two related, yet different, concepts that originate from the
multiple combinations of technology and entrepreneurship emerging in
the digital age with an important socio-economic impact. Digital tech-
nology entrepreneurship comprises entrepreneurship that is concerned
with activities that imply that new commodities and services are brought
to the market which are based on ICTs only; entrepreneurial activities
with digital entrepreneurship are related to the creation of ICT-based
smart devices with the help of the internet, for example, smartphones
(Giones and Brem, 2017). By contrast, digital entrepreneurship is the
broader term that refers to the introduction of new commodities and ser-
vices, which are based on the internet, e.g., apps, and where technology
is one input factor among others. Hereby, the innovative commodity,
product, or service is typically running in a cloud and uses big data or
AI (Giones and Brem, 2017). Airbnb, Snapchat, and Uber are common
examples of digital entrepreneurship.
Following this distinction, we refer in this book to the broad definition
of digital entrepreneurship given by Sussan and Acs (2017, p. 66), who
define a digital entrepreneur as “any agent that is engaged in any venture
be it commercial, social, government, or corporate that uses digital tech-
nologies”. Another definition, based on the literature, argues that digital
entrepreneurship substitutes some or all physical elements of a conven-
tional organisation by means of internet-based technologies (Hull et al.,
2007; Hair et al., 2012; Belk, 2014; Le Dinh et al., 2018). According
to this perspective, Hull et al. (2007) propose and categorise digital
entrepreneurs into three types: the first one is a ‘click and mortar’ entrepre-
neur where digital products and services form a complement to a conven-
tional business venture. The second type relies on a significant integration
of digital technologies into the value chain. The third entrepreneur refers
to an entire digital venture. In the initial era of e-commerce, this type
was named a ‘pure play’ entrepreneur. In this book, we acknowledge that
4

all three types are relevant to the sharing economy. With this variety of
different activities observed, it can be argued moreover that digitisation
implies a democratisation of entrepreneurship (Aldrich, 2014).
Digital Entrepreneurship in the Sharing Economy:

A Paradigmatic Shift
In practice, the number of sharing-economy platforms and their users
has recently reached the point where it clearly challenges the traditional
businesses (Barnes & Mattsson, 2016; Belk, 2014). In this book, we relate
this disruption to a shift in paradigms for entrepreneurship research and
practice. Given the multiplicity and complexity across the value chains
due to the sharing economy in areas of ICT-based technology and emer-
ging contemporary digital-related entrepreneurship activities, we suggest
that at least three major approaches exist which contextualise the entre-
preneurial potential of the sharing economy:
• First, entrepreneurship in the digital age incorporates various elem-

ents of entrepreneurship including the creation of new digital business
ventures in the sharing economy. Digital entrepreneurship in the
sharing economy is, thus, primarily associated with entrepreneur-
ship through creating novel sharing-economy platforms. This emer-
ging type of entrepreneurship occurs across industries but is most
commonly related to the high-technology enterprises or sectors of
an economy. Hence, digital entrepreneurship in the sharing economy
represents a new form of technology entrepreneurship.
• Second, digital entrepreneurship is, moreover, taking place through
the exploitation of existing sharing-economy platforms. In this case,
platforms that are already established represent a key element of a
novel business. In this sense, digital entrepreneurship in the sharing
economy includes not only the creation of new platforms but also
the use of existing platforms for new business ventures, based on the
platforms.
• Third, the new digital entrepreneurship opportunities are most
likely to embrace disruptive activities in existing business models
and practices along with the creation of new ventures. Established
businesses are challenged through the advent of the platform-based
sharing economy and will be increasingly pressurised to adapt their
existing business models in order to prevent them from becoming
obsolete. These activities could either collectively or singularly capit-
alise upon the sharing-economy platforms. Our definition of digital
entrepreneurship in the sharing economy, thus, includes the entre-
preneurial products, processes and innovations occurring across the
value chains of existing and new business models, where sharing-
economy platforms are used as, for example, marketing channels to
reach to new types of users and customers, or for the financing of
5
Introduction 5
new activities when the core business activity may not be directly
related to the sharing economy itself.
In this book, we posit that the processes associated with these three
perspectives of entrepreneurial activity and the sharing economy are
determined by the same generic elements that apply for ‘traditional’
entrepreneurship outside the platform-based sharing economy (Standing
and Mattsson, 2018; Hull et al., 2007; Kraus et al., 2019). In this sense,
we draw from the existing literature in establishing a broader concept
perspective of digital entrepreneurship in the sharing economy, which is
based on Giones and Brem (2017). We present the various entrepreneurial
activities associated with collaborative consumption and the use of digital
technologies in the sharing economy as part of a broader understanding
of digital entrepreneurship.
Entrepreneurship with Big Platforms and Reduced Transaction

Costs: Challenges and Opportunities
The nature of ‘digital entrepreneurs’ and ‘digital entrepreneurship’ is com-
monly associated with large, global players such as Google, Facebook,
Apple, Airbnb, Uber, and their platform-based global business models.
Some of these companies came to life in a segment of the economy that
enjoyed a zero marginal cost structure, which means that the cost of pro-
ducing one extra unit of product/service was almost zero when they started
a global expansion. Such globally expanding companies began to realise
that the digitalisation process brought about the disintermediation (that
is, selling directly to customers through online shops and getting rid of the
middlemen in the value chains), which represented an important enabler
and acted as the medium to connect independent groups of individuals
via digital media and platforms. As a result, those companies benefitted
from network effects (which happen when one more user will increase the
utility for other users of the product, and, through this effect, with a rising
number of users, the utility for individual users increases as well).
Networked systems based on digital platforms, media, and systems,
thus, generate advantages to companies by reducing the transaction costs
such as the costs of searching, identifying, and communicating, negoti-
ating and dealing with customers, and opening up new interaction modes
or market opportunities with global customers. On the basis of these
advantages, the big players in the digital marketplace benefit enormously
from network effects effective on a global scale. For instance, the Google
search engine relies on the users to refine its searches, and the better the
search result is, the more people will use it. Hence, the more users apply
this specific engine for their searches, the higher will be the advertising
revenue for Google. In a similar vein, Microsoft’s Windows, Apple’s
IOS, Google’s Android, Fitbit’s app, or Facebook are platforms that are
attractive because of the network effect.
6

This matter-of-fact influences our perspective on digital entrepreneur-
ship as well. Hence, our perspective on this issue is platform based, which
defines the technical side and basis of the business model for digital entre-
preneurship in the sharing economy. While the network effects facilitate
early scaling and expansion of new digital businesses, such expansion is
also dependent on ‘first-mover’ advantages, which can be optimised by
the use of P2P platforms. Entrepreneurs, that is, new business ventures
as well as social enterprises entering a non-profit market are prototypical
‘first movers’.
The Web 2.0- based platforms with their two- sided markets, thus,
give lieu to the aforementioned entrepreneurial opportunities. On the
one hand, becoming entrepreneurial is facilitated as the businesses can
experiment with new ideas, applications and technologies and, thereby,
generate innovative solutions whilst realising low operating costs and
overcoming market-entry barriers. Conversely, the move of businesses
to a more digitised business model and markets such as platform-based
two-sided markets is also a result of pressures placed upon them by the
global markets and the rapid digitisation. As the Web 2.0 is associated
with both emerging opportunities and challenges for businesses, new
business models emerge. Their study requires new concepts, insights, and
paradigms from scholars.
Because transaction costs are reduced to nearly zero between the peers
with idling assets and those peers in need of assets and this facilitates
the collective (re)utilisation of underutilised assets across various scales,
the sharing economy provides a potential for massive entrepreneurship
with digital media, platforms and systems. In fact, such sharing-economy
and platform-based entrepreneurship are now developing in virtually all
sectors around the world.
The Structure of This Book

This book is organised in three parts.
Part I will present the conceptualisation of digital entrepreneurship
in the context of the sharing economy. It lays the theoretical ground to
understand digital entrepreneurship in the sharing economy, based on the
aforementioned approaches. After this introductory chapter, Chapter 1
explores entrepreneurship in the sharing economy as a regional-national
phenomenon, which seems to stand in contrast to the global and fast-
growing sharing-economy players such as Airbnb, Uber, and others. To
shed light on the regional-national dimension of digital entrepreneur-
ship in the sharing economy, Birgit Leick, Mehtap Aldogan Eklund,
Susanne Gretzinger, and Anna Marie Dyhr Ulrich explore the question of
which diversity of business models exists with regional sharing-economy
entrepreneurs. The authors argue that all entrepreneurs, including
sharing-
economy entrepreneurs starting locally, tend to spread any
technological and organisational innovation to new geographical areas
7
Introduction 7
and thus follow a path of geographical market expansion and inter-
nationalisation. However, regional sharing-economy entrepreneurs need
to tackle specific challenges, notably scalability issues and the need to
accelerate fast growth regarding the number of customers or users. To
understand the specific entrepreneurial characteristics of such business
models with platform-based sharing-economy players and the challenges
attached, the authors present an exploratory case study of four Norwegian
sharing-economy start-up businesses. Hence, this first chapter introduces
a core approach to turn entrepreneurial in the digital sharing economy
through creating and establishing own sharing-economy platforms using
digital tools.
Chapter 2 by Eva Delacroix, Florence Benoit-Moreau, and Béatrice
Parguel explores a different type of digital entrepreneurs in the sharing
economy, that is, necessity-driven subsistence entrepreneurs in the con-
text of P2P platforms. The authors acknowledge that the phenomenon
of subsistence entrepreneurship exists outside developed countries, and
it is evident with marginalised and poverty- struck individuals from
industrialised countries, who use on-demand platforms in the P2P sharing
economy to improve their household incomes. The authors study the case
of French women and migrants in France and Belgium and conceptualise
digital subsistence entrepreneurs by describing both their opportunities
as entrepreneurial individuals and the challenges they meet. In contrast
to Chapter 1, Chapter 2 rather emphasises on the opportunities of using
existing sharing-economy platforms in the digital economy as tools to
become a micro-entrepreneur.
The subsequent chapter takes on a different perspective that is devoted
to the types of business models in different P2P platform contexts
according to the B2C and B2B markets. Karl Joachim Breunig, Henrik
Johansen, and Jørgen Røste Kristiansen conduct a bibliometric analysis
of the extant research publications on sharing-economy business models.
By this token, the authors are able to establish a conceptual framework
that distinguishes constituent elements of three business models in the
sharing economy: P2P models with a triadic structure, models in the
business-to-business sector with dyadic structures and the business-to-
consumer sector with co-creation. The three types of business models
show distinct value-capture mechanisms and differ in terms of the value
proposition communicated. Hence, in the context of this book, Chapter 3
summarises the core elements of various business models found with P2P
sharing-economy platforms and thereby describes another way of turning
entrepreneurial in the sharing economy, that is, through developing novel
business models and altering existing models through digital platforms
and sharing-economy transactions. Since the literature addressing the
sharing economy and digital business models appears complex and
unstructured, the literature review conducted by Karl Joachim Breunig
(Chapter 3) makes a valuable contribution to wards highlighting the
main lines of thought related to these entrepreneurial activities.
8

The final chapter in Part I (Chapter 4) is written by Andrea Geissinger,
Christofer Laurell, Christina Öberg, and Christian Sandström. It provides
a systematic empirical account on the impact of the sharing economy on
the evolution of electronic commerce. Hence, this chapter conceptually
explains why the sharing economy gives rise to a relatively wide plethora
of e-commerce initiatives. The authors conclude that the conceptualisa-
tion of entrepreneurship in the context of the sharing economy needs to
be updated by considering the evolution of commerce. For instance, the
authors underline that social values and goals should be considered more
when dealing with digital entrepreneurship in the sharing economy. This
would back up the existing pluralities and dynamics of sharing economy
applications and push the frontiers in entrepreneurship research ahead.
Together, Chapters 1– 4 summarise the conceptual underpinnings
of the various approaches to digital entrepreneurship in the sharing
economy. They illustrate different theoretical perspectives, ranging from
traditional entrepreneurship theories to concepts of business models and
business model change, motivational factors of enterprising individuals in
contextualised settings, and e-commerce as a precursor of the platform-
based, digital sharing economy as we know it today. In essence, they add
conceptual rigour to the three approaches of turning entrepreneurial in
the sharing economy, as described earlier in this chapter.
Part II of the book is devoted to the cases and contexts for digital entre-
preneurship in the sharing economy. Its first chapter, Chapter 5 by Jie
Zhang and Nino Javakhishvili-Larsen, explores the regional differences
of the economic impact, which the company Airbnb, as one of the biggest
sharing-economy players in the tourism sector, has on urban and periph-
eral regions of Denmark. The authors show the asymmetric impact of this
big player on different types of regions and find that a regionally adapted
regulatory policy is necessary that pays attention to regional differences.
In essence, their contribution highlights why policies and regulatory
initiatives can be applied to diversify economic gains from digital entre-
preneurship such as Airbnb- based tourism activities and render such
activities favourable for various tourist destinations –not only those
located in urban centres and metropolitan regions but also in the more
remote and peripheral areas.
Given that digitisation also disrupts societies, not only businesses
and industries, social entrepreneurs with non-commercial business goals
and strategies are another important aspect of the novel approaches to
digital entrepreneurship in the sharing economy that are addressed in this
book. Chapter 6, written by Zeynep Özsoy and Beyza Oba, provides
an inspiring example of how a non-profit, P2P knowledge-sharing plat-
form has emerged as an ‘entrepreneurial’ reaction to the ecological dis-
ruption and inequalities in the agricultural sector in Turkey. The platform
originated from social activism and voluntarism when it was founded,
and it represented a reaction to the strict restrictions on digital media
in Turkey. The platform provides reliable and impartial content on
9
Introduction 9
eco-farming and their ecological products, which represents an important
social value. In addition, the platform extends the network boundaries
and thereby enhances its social impact by drawing in a rising number
of users. Simultaneously, the case study highlights core challenges for
social and non-profit entrepreneurship with digital entrepreneurship in
the sharing economy, for instance, the wish of the social entrepreneurs
for continuous decentralisation of the platform in spite of its growing
professionalisation and commercialisation as well as sustainability issues.
Digital entrepreneurs related to the sharing economy are, moreover,
gradually changing the way in which labour markets are organised and
function. New modes of organisation can be observed for individuals
using digital tools and the sharing economy for entrepreneurial activities.
In Chapter 7, Anh Nguyen-Duc and Simode Sperinde present a model
that explains how open innovation occurs in coworking spaces. The
authors explore the connection between open innovation and coworking
spaces as two trends that have emerged in the early 2000s and place
the trends in the context of the sharing economy. They use empirical
data from interviews with digital entrepreneurs and managers of software
companies operating Norwegian coworking spaces. The authors find that
such coworking spaces represent a large potential to foster open innov-
ation among early stage start-up companies and involve open innov-
ation processes. These findings are valuable to guide potential start-up
entrepreneurs that wish to use platforms in the digital economy and join
open innovation projects.
In Chapter 8 of the book, Alexandrea J. Ravenelle, Erica Janko and
Ken Cai Kowalski present a study of high-skilled workers with digital
platforms in the sharing economy. The authors explore the question of
why well-educated workers with prestigious work experiences are turning
to platform-based, so-called gig economy work and whether exclusive
gig work might represent a stepping-stone to turn into entrepreneurs.
Drawing on theories of pull/push entrepreneurship, the authors study
these questions for the U.S., the biggest market for gig economy work,
and conclude that many of the gig workers represent individuals with
entrepreneurial aspirations, but entrepreneurship itself represents only a
secondary interest for them related to the platform work. The case study,
thus, highlights the ambiguous motivations of individuals using platforms
for entrepreneurial activities.
The final chapter in Part II, Chapter 9, is written by Ozge Kirezli and
M.G. Serap Atakan, who present a Turkish case study on coworking
spaces that illuminates the benefits offered to the users in an emerging-
market context. The authors posit that advances in ICT technologies and
the increase of the self-employed workforce give rise to the emergence of
coworking as a specific type of entrepreneurship; it connects corporations
with unused office space and individuals such as freelancers and remote
workers. The authors describe the benefits of the selected coworking
spaces as a factor that facilitates the work of individuals operating in
01

the sharing economy. One major effect identified is networking and
community- building advantages that encourage individual users to
interact in coworking spaces and cooperate with other users. Moreover,
the authors emphasise that the digitisation itself is a valuable asset for
enterprising individuals notably in an emerging-market economy such as
Turkey by showing the functional, special and digital benefits that are
provided through the use of coworking opportunities.
Altogether, the case studies presented in Chapters 6–9 show various
aspects related to digital entrepreneurship in the sharing economy across
different sectors and contexts. Some chapters illuminate the oppor-
tunities and challenges of social and non-profit entrepreneurship with
sharing-economy platforms. Social and non-profit entrepreneurship is
often an under-studied aspect of the entrepreneurial potential through
the sharing economy. Other chapters are devoted to new approaches
to organise labour and workforces, for instance, through coworking
spaces, which can be considered as an extended notion of digital entre-
preneurship and a potential element of an ecosystem for digital entre-
preneurship in the sharing economy. In addition, regional differences
of the impact of sharing-economy companies and organisations are
demonstrated for the tourism industry. Notably the latter applica-
tion points at regulatory issues and policies as an important factor in
the external environment where digital entrepreneurs in the sharing
economy operate.
The final part of this book, Part III, sheds light on governance and
legal frameworks for digital entrepreneurship in the sharing economy.
Chapter 10 by Emily M. Weitzenboeck analyses how digital entrepre-
neurship in the sharing economy is regulated in the European Union. It
starts by exploring from a legal perspective the regulatory framework
of the sharing-economy platforms and the position of service providers
who share goods and services via platforms in the European Union. The
chapter sheds particular light on the governance mechanisms available
to policy-making. It identifies what rules are applicable and the extent to
which they are mandatory, or not, and which issues may be left to con-
tractual negotiation between parties operating in the provision of goods
and services through the sharing economy. The chapter provides a com-
prehensive overview of legal aspects and notably challenges emerging for
potential entrepreneurs located or operating in a large Common Market
such as the European Union.
For the Northern American grand region, regulatory frameworks
are different, compared to the European Union. To shed specific light
on this particular legal context, Joan MacLeod Heminway studies the
dynamism of U.S. crowdfunding for entrepreneurship in Chapter 11. She
asks whether U.S. securities crowdfunding is a promising avenue to raise
capital for low-income entrepreneurs and small businesses. By providing
a tempting perspective for entrepreneurs, notably those in subsistence
entrepreneurship conditions and precarious circumstances, the author
1
Introduction 11
explores the obvious and less obvious costs as well as the more uncer-
tain benefits that the U.S. laws and regulatory frameworks provide. The
lessons learnt from this discussion can be used to generate insights into
legal measures in other countries, notably concerning the question of how
such frameworks may support, or not, the longer-term prospects of pre-
carious entrepreneurship using the sharing economy.
Chapters 10 and 11 illustrate key opportunities and challenges related
to the regulatory and legal aspects and governance issues with digital
entrepreneurship in the sharing economy. Despite the differing legal-
institutional backgrounds in the case studies, some important overarching
lessons can be derived from the studies, which illuminate how digital
entrepreneurs deal with the complexity of legal-juridical frameworks.
Although these two chapters in this volume provide only snapshots of the
wealth of knowledge available in this research area, the insights gathered
are valuable in informing policy-makers on regulatory-legal aspects and
governance, which affects digital entrepreneurship in the shared economy.
Summary of the Aims and Approach of the Present Book

Although there are many recent and forthcoming books on the topics
of digital entrepreneurship and sharing economy, most of them empha-
sise one of the two topics in isolation. The present book, however,
aims to connect these hitherto unconnected strands in the literature on
digital entrepreneurship and the sharing economy. With the collection
of 11 chapters on various aspects, ranging from the conceptualisation
of the phenomenon, cases and contexts to legal and governance-related
issues, the volume presents a unique collection of relevant and cutting-
edge research topics for scholars and practitioners who are interested in
either one of the topics or their connection. The chapters collected in this
volume, thus, lay the ground for studying some of the key elements of an
ecosystem for digital entrepreneurship in the sharing economy.
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31
Part I
Conceptualisation of Digital
Entrepreneurship and
Sharing Economy
41
51
1
Regional Sharing-Economy
Entrepreneurs and the Diversity
of Their Business Models
Birgit Leick, Mehtap Aldogan Eklund,
Susanne Gretzinger, and
Anna Marie Dyhr Ulrich
Introduction
Parker et al. (2016, p. ix) write about entrepreneurs in the digital,
platform-based age as follows: ‘The platform model underlies the success
of many of today’s biggest fastest-growing, and most powerfully dis-
ruptive companies’. In fact, entrepreneurs in the sharing-economy are
typically innovative business startups that rapidly grow into large,
international players, some of them even from the earliest days of their
inception (Kathan et al., 2015; Wang and Nicolau, 2017). The reasons
behind their growth and internationalisation model are that the advent of
a platform-based, and often global, online market with its digital infra-
structure allows start-up entrepreneurs to perform entrepreneurial activ-
ities in a fast and smart way (Standing and Mattsson, 2018). However,
such platform-based entrepreneurs in the sharing economy are simultan-
eously strongly dependent upon the existence of sufficient demand-side
network effects (cf. Apte and Davis, 2019; Parker et al., 2016), which
requires them to quickly spread their services or content among a steadily
rising number of users. Since this enterprise development path exposes
business start-ups in the platform-based sharing economy to a global
hyper-competition in the online world, many do not survive and leave
the market.
Altogether, this picture of entrepreneurship in the sharing economy
is dominated by global players and national champions (such as the
Swedish fintech Klarna) that develop a viable business model based upon
the network effects enabling fast growth and expansion to global markets
(Parker et al., 2016) and have sufficient resources from the national or
global ecosystems. By contrast, the exploding literature on the sharing
economy pays less attention to sharing- economy entrepreneurs with
regional markets and the question of whether they can persist despite the
importance of network effects on the global level. Regionally anchored
sectors offer abundant opportunities for innovative start-ups to pitch
their ideas by means of digital environments, for instance, in retail trade,
61
16 Birgit Leick et al.

the tourism and hospitality industries, farming and food economies,
and the cultural and creative sector. For entrepreneurs in the sharing
economy that operate in such rather regional than globalised sectors,
several challenges emerge for the creation of a viable business model
because they might find it harder to exploit network effects for their firm
growth, compared to those platform-based sharing-economy ventures
that grow and internationalise rapidly (Vadana et al., 2019; Wentrup
and Ström, 2019).
By regional sharing- economy entrepreneurs, we define start-
ups and early stage business ventures in the platform- based sharing
economy that operate in a specific regional-national market area and
are not internationalised from the outset. Regional sharing- economy
entrepreneurs, thus, differ from their ‘born global’ and ‘born digital’
counterparts (Monaghan et al., 2020) in various respects: They sup-
posedly have distinct characteristics of their business model with regard
to the start-up stage, the opportunities for revenue generation and scal-
ability (which both depend upon a growing number of users), and their
overall viability as a new business venture in a global, and generally,
hyper-competitive, market. Given the variety of business models existing
with sharing-economy providers (Acquier et al., 2019; Assadi, 2020), we
argue that there will be a diversity of business models and business devel-
opment paths with regional sharing- economy entrepreneurs that will
need to be explored to understand this phenomenon.
To date, there is no evidence available pointing to how the dis-
tinct business models of regional sharing- economy entrepreneurs
might be described and if there exists at all a business model of such
entrepreneurs with specific and common features. Hence, this chapter
explores two central questions relating to this topic: (a) What are
the entrepreneurial characteristics of applied business models in the
platform-based sharing economy on the regional level? and (b) Which
diversity of business models exists with such regional sharing-economy
entrepreneurs? We present a concise literature review, which will be
followed by an exploratory case study of the applied business models
with four Norwegian start-up entrepreneurs in the sharing economy.
The focus of this chapter is, thus, not to explain the technological side
of digital entrepreneurship with the platform-based sharing economy,
but illustrate the variety of business models on a regional scale and
describe how these entrepreneurs, starting off regionally, are connected
with national or global scales.
The rest of this chapter is organised as follows: The next section
presents the related literature, followed by a section on the method-
ology and research design, including short profiles of the entrepreneurs.
Subsequently, the empirical analysis is, first, presented and then discussed.
The final section concludes the core ideas and findings and provides
implications for practice and research.
71
Regional Sharing-Economy Entrepreneurs 17
Literature Review
Business Models in the Platform-Based Sharing Economy

Business start-ups in the platform-based sharing economy benefit from
low transaction costs associated with the creation of a digital business
and their immediate exposure to and visibility in a global community.
However, not all sharing-economy entrepreneurs survive the early stage
period, given the hyper-competition in the platform-based economy, a
lack of scalability and substance. Therefore, a viable business model is a
core pillar that business ventures in the platform-based sharing economy
need to rely upon (Kumar et al., 2018; Muñoz and Cohen, 2017).
Business models with sharing-economy entrepreneurs are positioned
in so-called two-sided markets (Eisenmann et al., 2006). They are closely
related to an entrepreneur’s strategy in the market (Assadi, 2020) and
‘describe the link between a company’s resources and skills to create
value for both target markets and business owners’ (Assadi, 2020,
p. 2). Several criteria are used to characterise sharing-economy business
models such as the use of network effects and switching costs, the logics
concerning value creation and distribution, and transaction-cost consid-
erations with the model (Apte and Davis, 2019). Acquier et al. (2019)
emphasise the value-creation and value-distribution dimensions as two
critical characteristics to assess business models in the sharing economy;
they also provide different managerial implications for various models
concerning the scalability, value creation and distribution with the model.
In fact, the value creation and co-creation mechanisms for stakeholders
involved as well as revenue generation for the entrepreneur are two key
features to determine the financial side of the model (Acquier et al., 2019;
Cohen and Kietzmann, 2014), both of which are important to exploit the
entrepreneurial opportunities and manage the expansions of operations
to a rising number of users, regionally, nationally and internationally
(Acquier et al., 2019).
Therefore, a key criterion to determine regional sharing- economy
entrepreneurs is whether their business model is scalable enough to
exploit network effects (Acquier et al., 2019). As Holzweber et al. (2015),
and Standing and Mattson (2018) stress, in the early stage period of the
start-up, entrepreneurs in the sharing economy need to rely on a core
community of users and consumers to help them expand their business
operations and promote their product or service. In later stages of enter-
prise development, however, the management of firm growth towards a
scalable business becomes a critical task for the sharing-economy entre-
preneur (Apte and Davis, 2019). Depending upon the specific model,
network effects can accelerate this firm growth and expansion (as is the
case with the so-called ‘shared infrastructure providers’, for instance, big
car-sharing providers; Acquier et al. 2019) or threaten the entrepreneur’s
81

viability. In the latter case, no significant effects can be generated and
companies stay beyond a limited number of users required for their
growth, for instance, because of the social orientation of the entrepre-
neur and the social, non-profit character of the entire business model (as
with ‘mission-driven platforms’, which typically have not only for-profit
goals, cf. Acquier et al. 2019).
Besides, the sustainability of the business model is another key cri-
terion (Acquier et al., 2019). Sustainability in this context refers to both
environmental- societal concerns and the long- term persistence of the
business model in the market. Sustainability concerns have been a key
incentive for consumers and entrepreneurs to engage in collaborative and
shared consumption (Schor and Fitzmaurice, 2015) and influence the
thinking of some sharing-economy start-ups still today (cf. Plewnia and
Guenther, 2018). Finally, Assadi (2020) addresses the governance of the
business model as another relevant category.
Altogether, we argue in this chapter that the persistence, or viability,
of the business model is a specifically important criterion for regional
sharing-economy entrepreneurs to survive in a global market. Besides scal-
ability considerations, the revenue generation is, thus, paramount to the
entrepreneur because ideally revenues should come from multiple parties
such as buyers, sellers, or both, which implies that the revenue models
applied might be diverse (Täuscher and Laudien, 2018). Hence, the vari-
ation of business models with regional sharing-economy entrepreneurs is
expected to be large, which calls for their conceptual integration.
Entrepreneurship in the Platform-Based Sharing Economy

Richter et al. (2015) acknowledge that entrepreneurship in the digital age
such as with the platform-based sharing economy is driven by the emer-
gence of new business opportunities through rapid technological progress
(Hull et al., 2007; Kraus et al., 2019). Despite the presence of technology
as a strong driver, the same basic tenets apply for entrepreneurship in
the digital age, as compared to the pre-digital times (cf. Standing and
Mattson, 2018). Entrepreneurs need to be risk-taking, forward-looking
and opportunity-seeking individuals, who take various decisions about
the evaluation and exploitation of opportunities as well as operational,
growth and exit steps. Moreover, they typically develop a vision about
a marketable product or service, which is supposed to represent an
innovation to the market (cf. Davidsson, 2016). In addition, a key diffe-
rence between digital and non-digital entrepreneurial activities and the
innovation generated is that part is always a digitised product or service,
which is not provided physically (Hull et al., 2007; Richter et al., 2017).
Finally, because entrepreneurship in the sharing economy is taking new
ways outside the ‘conventional ownership-based economy’ (Richter et al.,
2015, p. 27), it is a cost-effective way to turn into an entrepreneur with a
business idea and embark on a ‘trial-and-error’ path at low cost.
91

This latter argument is reflected in the motivational factors of
entrepreneurs in general, which are often distinguished into opportunity
versus necessity-driven entrepreneurship. Van der Zwan et al. (2016)
associate opportunity entrepreneurship with pull factors that drive start-
up entrepreneurs to seek and exploit business opportunities in the market
which they identify, while necessity entrepreneurship happens through
push factors such as previous unemployment or a lack of job opportun-
ities (cf. Giacomin et al., 2011). These arguments refer well to the sharing
economy, and, indeed, there is an ongoing discussion in academia about
whether individual persons using platforms for entrepreneurial activities
are income-increasing consumers, formally self-employed, but dependent
workers or true entrepreneurs. While Ravenelle (2017) and Webster and
Zhang (2020) find evidence that self-employed individuals use platforms
such as Airbnb, Uber, and others to start a low-level business through the
platform, the consensual opinion is rather that the use of the platforms
to create entrepreneurial opportunities is more about de iure inde-
pendent, but platform-dependent work employment than actual entre-
preneurship. By focusing on individuals creating digital platforms in the
sharing economy for their business idea, the focus of the present chapter
is clearly on entrepreneurs. Still, they might be motivated by opportun-
ities, necessities or both (Giacomin et al., 2011). Concerning entrepre-
neurship in the sharing economy, it is also important to note that both
commercial (for-profit) and non-profit business start-ups can be enabled
through platforms. Social entrepreneurship is another important type of
entrepreneurial activity facilitated by digital opportunities, for instance,
to support projects with social or environmental goals (cf. Acquier and
Carbone, 2018).
Regional Sharing-Economy Entrepreneurs in the Existent

Empirical Research
The point of departure for regional entrepreneurship is rooted in
Feldman’s (2001) argument that a business start-up is both embedded in
and influenced by the regional context. With the idea of regional sharing-
economy entrepreneurs, we conceptualise a distinct type of regionally
anchored business start-up that adopts elements from business models
known for the platform-based sharing economy (Acquier et al., 2019),
respectively entrepreneurship in digital environments (Standing and
Mattsson, 2018). Despite the burgeoning literature on digital entrepre-
neurship and business models in the sharing economy, there are only a
few case studies shedding light on their regional dimension: Paulauskaite
et al. (2017) demonstrate the importance of the sharing economy for the
regional economies, for instance, Airbnb connected to regional tourism.
Grèzes et al. (2016) and Gyimóthy and Meged (2018) highlight the spe-
cific business models for tourism-based sharing-economy initiatives in a
specific case region. Other examples presented for the sharing economy in
02

its regional context illustrate urban phenomena such as fashion libraries
in Nordic capital cities (Pedersen and Netter, 2015).
Jointly, these few empirical cases illustrate the opportunities for
non-profit business models of regional entrepreneurship in the sharing
economy, which matches our understanding of this phenomenon in the
present chapter. However, this literature does not answer the questions of
how for-profit, corporate start-up entrepreneurs with various goals and
motivations in the sharing economy may persist without going global
very swiftly and which business models might be characteristic of such
regional entrepreneurship with digital technologies.
Methodology and Research Design
Research Design and Sampling Process

In 2019, the authors identified ten sharing- economy entrepreneurs
located in Norway through leads from experts as well as a structured
search on the internet. Two research associates searched in Norwegian
newspapers, magazines and databases for leads that would hint at start-
up companies fulfilling the following criteria: (i) The companies needed
to be located and operate in Norway. (ii) All industries and sectors of the
Norwegian economy were considered, including social enterprises and
the public sector. As examples, the companies contacted were in bicycle
and car-sharing, meal-sharing and dining, crowdfunding, business incu-
bation services, social and community services, and energy and environ-
mental services. (iii) The companies needed to be recent start-ups with
peer-to-peer platforms and not just exploiting social media or web-based
applications for their business ventures.
Between July and September 2019, the ten selected entrepreneurs were
contacted initially, and the requests were followed up over the winter
2019/2020. Since four of the entrepreneurs agreed to talk with the author
team already after the first contact, they were interviewed between August
and October 2019, either in personal, face-to-face interviews or through
phone calls. All four interviews were based upon structured questionnaires
containing four overarching blocs of questions with between four to ten
questions each. The questions were a mix of closed and open questions,
focusing on the background of the business start-up, the business model,
the role of the location for the company and its future development.
These questions were aligned to relevant theories, for example, entrepre-
neurial motivation and general entrepreneurship theory, business models
with digital entrepreneurs in the platform economy and international-
isation models. Given that the start-ups included were heterogeneous in
several of these characteristics, the questionnaires were customised to
the individual company interviewed, which allowed for a case-specific
investigation. With this setting, the research design is exploratory in
that it seeks to understand the characteristics of business models with
12

local sharing-economy entrepreneurs without any pre-requisite know-
ledge from theories, which is in line with grounded theory (Strauss and
Corbin, 1998).
The four sharing- economy entrepreneurs have the following short
profiles: The first entrepreneur –entrepreneur A –is a car-sharing pro-
vider, quite similar to big international ones such as Zipcar. Entrepreneur
A applied this common business model for the peer-to-peer platform-
based sharing economy to the Norwegian market. Their headquarters
is Oslo, and they are using their own-programmed platform. The next
sharing-economy entrepreneur B is a crowdfunding company, which
was founded and is headquartered in Oslo. It is a national crowdfunding
provider, again, using an own- programmed peer- to-
peer platform
for the Norwegian market. The third entrepreneur C is a peer-to-peer
platform-based provider of welfare, employment and social services to
public employers and municipalities; the company was founded and is
headquartered in Oslo. The final company, sharing-economy entrepre-
neur D, is a social network based in Stavanger that uses a peer-to-peer
platform to bring together neighbourhoods, social communities, for
dining, eating and cooking experiences. Like A, B and C, this entrepreneur
offers an own-programmed platform. Hence, all four sharing-economy
entrepreneurs represent true business start-ups, which have created an
own digital peer-to-peer platform. Moreover, all of them were founded
regionally in Norway (Oslo, Stavanger). In this respect, they represent
regional sharing-economy entrepreneurs, as portrayed in this chapter.
Methodology and Data Analysis

For the data analysis, a multiple-step coding approach in line with Saldaña
(2016) and grounded theory thinking (Strauss and Corbin, 1998) was
used. As a first-cycle coding, an open macro-level coding technique was
applied for code mapping and landscaping to identify the basic themes
and issues that make up the phenomenon of interest (Dey, 2003). The
aim of using macro-level coding in the first cycle is to grasp the topics
inherent in the data, which matches contexts when scholars have already
gained a general idea of the various dimensions of the phenomena under
investigation. The general idea concerning the phenomena investigated
in this chapter is that ‘regional sharing-economy entrepreneurship’ will
contain four basic elements, i.e., entrepreneurship, the business venture,
business model and future development (Figure 1.1). In this process, a
central assumption was that, in order to understand regional entrepre-
neurship in the sharing economy, the relation of the global dimension to
the regional dimension needs to be illuminated.
The first-cycle, macro-level coding represented preparatory ground-
work for a more detailed and subsequent coding of data in the second
cycle (Saldaña, 2016), which aimed at identifying first-order and second-
order concepts underlying the final aggregation of analytical dimensions.
2
Aggregate Business model

analycal Future-related
Entrepreneurship Business venture including
dimension approach
digital plaorm
(axial coding)
Movaon: Start-up phase Financial structure Future orientaon

Second-order Necessity/opportunity
themes Extrinsic/intrinsic Funding Customer value Stepwise
(first-cycle internaona-
coding) lizaon
Relaonships Customers Technology
Firm growth
IT experts (crical mass)
Bolenecks
First-order
(informant)
concepts Informaon based upon the process a er coding and interpretaon
Figure 1.1 The theoretical dimensions of the concepts.
Here, the software programme Atlas.ti was used, which provided a list
of codes to derive the first-order concept. Moreover, so-called ‘after first-
cycle coding’ tools of Atlas.ti were used for code mapping and land-
scaping to deduce a system of general dimensions with first-order and
second-order concepts. Subsequently, second-cycle coding was applied
as an advanced way of reorganising and re- analysing data coded in
the first cycle. While the first-cycle coding resulted in a draft of general
dimensions, the second-cycle axial coding was about (re-)sorting and
linking the concepts from the first cycle (Boeije, 2009; Saldaña, 2016).
Based upon this structure, finally, the theoretical dimensions were derived
(Figure 1.1), which are referred to in the empirical analysis. Finally, the
empirical analysis uses the case-study approach (Siggelkow, 2000) to
explore the topic and relationships studied and add to the scarce theory
on these topics in the extant literature (Eisenhardt and Graebner, 2007).
Empirical Analysis
The Entrepreneurship and Business Venture of Regional

Sharing-Economy Entrepreneurs
The entrepreneurs investigated have different motivations for starting
up their business venture in the sharing economy. The founding person
behind entrepreneur D was confronted with a relocation to a new city in
Norway, which she experienced as follows:
I felt that I was alone and it was difficult for me to go to some place.
Every time it would get difficult for me to get the occasions to meet.
So I wanted to fast-track this.
32

Based upon her own needs and creativity, she derived the business idea;
in addition, the entrepreneurial venture was driven by necessities, as she
says: ‘I was scared that I could not get a job. So I wanted to keep myself
busy and wanted to do what I knew I could do’. By contrast, the motiv-
ation was different for the former business start-up A because they saw
the market opportunity of adapting an existing car-sharing business idea
from the global market to the Norwegian market. Both entrepreneurs,
however, express their desire to build a scalable business for a growing,
and perhaps, international market. For entrepreneur C, the motivation
was driven by market opportunities in crowdfunding services for the
Norwegian market rather than by necessities. In this case, the venture is
influenced by the social charity background of the founder, who has been
working in church-owned charity projects before. In a similar vein, entre-
preneur D shows an opportunity-driven mindset with a social goal. In
other words, all four entrepreneurs do not only have a business-centric,
extrinsic motivations to develop a market, but also intrinsic goals such
as environmentally friendly alternatives (A), solving social challenges (B
and C) and enabling social contacts through joint experiences (D). Some
of the founders are serial entrepreneurs (Plehn-Dujowich, 2010) with
experience in founding and running a business (C and D). For example,
entrepreneur C states that this facilitated his business:
I think that is also the reason why I got all the trust from the muni-
cipalities for this venture. Because they have seen that we have hold
on to something before.
In the case of A, the founder has worked as manager in the sharing

economy before.
Relationships were important resources for the entrepreneurs’ start-up
period and the subsequent business development, as all four entrepreneurs
state. In the case of C, the business developed in an incremental fashion,
guided by the use of relationships of the founding person through social
(friends and socially motivated students) and business networks (profes-
sional contacts from previous charity work). Professional relationships
from the founder’s previous experience as an established sharing-economy
manager in Norway facilitated the process of getting established with
entrepreneur A. Public relations to press agents in Norway were another
important resource for A and D. For the start-up period, it was also a
benefit to integrate close contacts from both social and business networks
into a founding team (A, B, C) in order to issue shares instead of paying
salaries and thereby starting up in a cost-effective way.
While the former business start-ups A, C and D were inspired by other
platforms in Norway or abroad, this was different for B, because their
inspiration stemmed mostly from the personal charity orientation of the
founder. For the business venture, all four founders needed abundant
resources despite the relatively low-cost use of technologies; funding was
42

expressed as a key to getting the business venture started. The entrepre-
neur C envisaged international funding, while B and D targeted national
funding by the Norwegian innovation agency ‘Innovasjon Norge’.
Regarding the timing of the business venture and its kick-start, there
were abundant funding opportunities in the 2010s in Norway, together
with an increased awareness of policy and society for digital platforms.
Diversification among potential customer target groups was recognised
by the four sharing-economy entrepreneurs as a must. However, while
C, for example, started with local-regional customers as a first step, the
other three entrepreneurs (A, B, D) targeted national and even inter-
national customers from the start.
The Business Model and Its Digital Platform

The business models identified with the four sharing- economy
entrepreneurs are different but show similarities. The business model that
the entrepreneur behind business venture C defines:
C is not a marketplace like Uber or Airbnb … it is actually a col-

laboration tool for local governments focusing on making it easy to
mobilise idle resources for important welfare tasks.
seems different from what the car-sharing platform A summarises as

follows:
We are a two-sided platform where we let the ones that have a car to
rent it out to people in need of a car. And the business model is that,
as a platform, we are sitting right in the middle of the two parties.
To describe these business models more closely, the financial structure

and customer value proposition are two important components from the
literature (Acquier et al., 2019). As to the financial issue, the four sharing-
economy entrepreneurs express that they value the fact that a platform-
based, digital business model runs at low costs. Only with case D, high
costs are incurring due to the recruitment of IT experts to program and
establish the platform. All entrepreneurs operate on a fixed fee, paid by
the customers, as their main revenue stream. Hence, they are, indeed,
dependent on the generation of network effects. Notably entrepreneurs
A and C, however, see themselves and their business model as an orches-
trator based on the platform that connects the supply of the service
provided with the customers. For the customer value, all entrepreneurs
acknowledge the importance of placing customer value at the centre of
their business model and using the platform to generate customer value,
which seems as a unifying characteristic for them.
Apart from this, the technological side with the platform is another
key element of the business models investigated. All four entrepreneurs
52

have programmed the platforms themselves by employing IT software
engineers, either with their integration in the founding/management team
(A and C) or buying their expertise externally in for project work (B
and D). None of the entrepreneurs interviewed uses pre-programmed
platforms, and therefore, the platform itself adds significant value to the
business model. To prevent them from being stuck into a lack of such
effects, entrepreneurs B and C have established a business model that
does not only operate as a platform orchestrator between supply and
demand side, but also sells the entire platform-based business model to
corporate customers. In the case of B, the entrepreneur actively develops
the market by selling the platform to banks through a licencing model
such that the banks buy in their programmed platform for crowdfunding.
The same model applies to entrepreneur C with municipalities. This is a
smart way for the entrepreneurs to create greater revenue and secure the
firm growth envisaged.
The technology is furthermore important because the entrepreneurs,
who are no IT programmers and software developers, learn about the
platform, its usage and the customer value it adds to the other elem-
ents of the business model. This, in turn, enables them to develop it
further. For instance, A started with a limited functionality that was
gradually extended. However, it may happen that the technology use,
which is based upon the platform, is limited by regulation and laws, as
the entrepreneur behind D acknowledges: Due to the introduction of
strict data protection legislation by the European Union, they could no
longer exploit the personal customer profiles to customise and develop
the business model.
The Regional-National-Global Scales for the

Sharing-Economy Entrepreneurs
All four entrepreneurs started regionally, mostly in the capital city of
Oslo in Norway. However, their business development paths evolved
differently. For D, a lack of scalability and committed supporters (such
as colleagues in the founding team, collaborators) led to their failure
of the sharing-economy venture after some time, and the platform was
put on ice. Quite differently, B incrementally developed into a national
crowdfunding player that, however, remained limited to the Norwegian
market. As the interviewee stresses, to finance international expansion,
they would need an English website and extended functionality with
more internationally accepted payment methods. Both A and C have spe-
cific expansion plans abroad. The entrepreneur behind C is applying for
international grants to start pilot projects in several EU countries after
having already expanded to neighbouring Sweden. They are applying a
step-by-step approach to achieve this international market penetration.
A has been benefitting from an investment by an U.S. based car-sharing
company that bought shares of the company, which allows them to
62

Table 1.1 The four sharing-economy entrepreneurs and their business
models –overview
Case Entrepreneurship Business venture
Motivation Relationships Start period Funding Customers
A • Opportunity- • Professional • Local start-up No funding Customer

driven relationships • Inspiration for through diversification
• Intrinsic and • Prior sharing- start-up from public acknowledged
extrinsic economy other sharing- sources as goal
manager economy
companies
• Better use of
idle resources
served as the
core idea for
business idea
and customer
value
B • Opportunity- • Personal and • National National • Customer

driven professional start-up funding diversification
• Intrinsic and relationships • Need for acknowledged
extrinsic • Charity- funding in the as goal
committed start-up period • Mix of local,
personality in regional and
society international
customers
needed
C • Opportunity- • Professional • National International • Customer

driven relationships start-up funding diversification
• Intrinsic and • Serial • Inspiration for acknowledged
extrinsic entrepreneur start-up from as goal
other sharing- • Local customers
economy in the beginning
companies • Mix of local,
• Need for regional and
funding international
acknowledged customers
in the start- needed
up period
• Better use of
idle resources
served as the
core idea for
business idea
and customer
value
72
Business model Digital platform Future-related approach
Financial Customer value Technology IT experts Geographical

structure expansion-
internationalisation
• Sharing- • Easy handling • Platform Entrepreneur Expansion and

economy of the orchestrates learns internationalisation
platform as a platform as between about the speeded up through
cost-efficient customer value supply platform foreign direct
solution • Trust as an and demand through investment
• Fixed important • Peer-to-peer experts
(%) revenue customer value platform is knowledge
based on • Services to an important acquired
transactions customers element of externally
over the designed the product/
platform according to service
• Platform inspiration from offered
used to other platforms • Platforms
orchestrate allows
supply and access for all
demand customers,
irrespective
of their
location
Fixed • Easy handling Peer-to-peer Entrepreneur • Incremental, stepwise
(%) revenue of the platform is learns expansion and
based on platform as an important about the internationalisation
transactions customer value element of platform • Bottlenecks (language
over the • Trust as an the product/ through barriers) and resource
platform important service experts (human resources
customer value offered knowledge and financial capital)
• Platform as a acquired scarcity as barriers to
tool to create externally quicker expansion
customer value
• Fixed • Easy handling of • Platform Entrepreneur • Incremental, stepwise

(%) revenue the platform as orchestrates learns expansion and
based on customer value between about the internationalisation
transactions • Services to supply platform • Priority on market
over the customers and demand through penetration and
platform designed • Peer-to-peer experts expansion based
• Platform according to platform is knowledge upon existing
used to inspiration from an important acquired platform
orchestrate other platforms element of externally • Expansion secured
supply and • Platform as a the product/ through funding
demand tool to create service
customer value offered
• Platforms
allows
access for all
customers,
irrespective
of their
location
82

Table 1.1 Cont.
Case Entrepreneurship Business venture
Motivation Relationships Start period Funding Customers
D • Opportunity- • Professional • Local start-up National • Customer

and necessity- relationships • Inspiration for funding diversification
driven • Serial start-up from as goal
• Intrinsic and entrepreneur other sharing- • Local customers
extrinsic economy in the beginning
companies • Mix of local,
regional and
international
customers
needed
perform further investments and speed up their international expansion

as well as the penetration of the Norwegian market.
Discussion
The kick-start of the business ventures was in all four cases characterised
by the ideas of the founding persons, on the one hand, and the avail-
able resources, including relationships and funding, on the other hand.
Moreover, we find both necessity-and opportunity-driven entrepreneurial
motivations, backed by a mix of extrinsic (market oriented) and intrinsic
intentions (environmental and social goals) with regional sharing-
economy business ventures. This is supported by the personality of the
founders, who bring along a vision about introducing specific sharing-
economy business models they get inspired with to the Norwegian market
or create a platform that suits the specific national market. To this aim,
the sharing-economy entrepreneurs both use and develop the platforms
as a tool to establish and expand their business. The technology and soft-
ware in a peer-to-peer digital environment constitutes a unique selling
point for their expansion, irrespective of the geographical scale, because
it offers significant customer value and, in some cases, additionally serves
as an independent pillar to generate a stable revenue stream.
A comparison between these business models reveals that a certain
level of professionalisation after the start- up period and in the later
stages of their business development, when expansion and international-
isation considerations become more important, is a crucial pre-requisite
for a regional sharing-economy entrepreneur to achieve scalability, avoid
common pitfalls such as a lack of network effects, and manage the expan-
sion to other geographical markets, either incrementally due to resource
limitations, or faster through investments. These components are, indeed,
92
Business model Digital platform Future-related approach
Financial Customer value Technology IT experts Geographical

structure expansion-
internationalisation
• High costs • Easy handling Platforms High costs Local market

due to of the allows of hiring penetration (big cities
recruitment platform as access for all experts to with critical mass
of experts to customer value customers, provide of people interested
program the • Services to irrespective knowledge in meal-sharing)
platform customers of their about the prioritised over other
• Fixed designed location platform expansion
(%) revenue according to
based on inspiration from
transactions other platforms
over the
platform
necessary to benefit from the positive network effects and safeguard the
viability of the business model. Hence, the case analysis illustrates that
there exists a variety of business models with regional sharing-economy
entrepreneurs (Table 1.1) with some striking similarities (for instance,
about the motivation and intentions of entrepreneurs) along with
important dissimilarities in the specific ingredients of the business model
and the entrepreneurs’ expansion plans.
Conclusions and Managerial Implications

This chapter provides an initial and exploratory study into regional
sharing-economy entrepreneurs and the diversity of their business
models. It is motivated by an evident gap in the literature on this aspect
of the sharing economy and entrepreneurship. As an overarching finding,
we conclude that the four cases represent different variants of regional
sharing-economy entrepreneurs with complementarities between their
business models. These complementarities, in turn, create the diversity of
regional entrepreneurship in the platform-based sharing economy, which
echoes Muñoz and Cohen (2017, p. 30) about that ‘sharing economy
business models are grey and not black and white’. With an exploratory
empirical case study, the chapter contributes to a better understanding
of the complexity of sharing- economy entrepreneurs, notably on the
regional and national level.
Furthermore, the empirical study illustrated that the platform itself
adds significant value to the business model of digital entrepreneurs.
Hence, the internet- of-
things (IoT)-and the platform- based sharing
economy has far-reaching managerial implications beyond what has been
presented here. In most entrepreneurial companies, the current state of
IoT and peer-to-peer platform development/usage is at a very low stage
03

and the internet and other technologies are primarily used to transfer data
to and from each sector’s cloud service. Consequently, the full potential
of the IoT era has not yet materialised, so the future opportunities in
internet-related industries are unlimited.
As an example of this, two entrepreneurs in the case study saw
themselves as platform owners and orchestrators of the customers and
the suppliers. As a platform owner, they gain more knowledge about
customers’ preferences and behaviour, and they can personalise the offer
to specific customers. This will motivate to stick with the platform because
leaving the platform in favour of another platform would also mean
leaving the value that the platform can create to the customer though
learning effects over time (Hollensen et al., 2020). As a first managerial
implication, one way for the platform owner to increase switching costs is
to make the platform incompatible with rival platforms. Hence, the level
of compatibility with competitive platforms is a strategic choice, some-
times desirable and sometimes undesirable from the platform owner’s
perspective (Tiwana, 2014). However, it might be a self-reinforcing pro-
cess, providing extra benefits and value: More attractive customers make
it more attractive for suppliers to enter the platform and offer their digital
services to the customers through the platform.
If the entrepreneurs use the platform to expand their business from
a regional to an international level, it could be expected that more
customers and suppliers will be involved on the platform, which needs
more coordination and implies an increasing ‘complexity’. Consequently,
a higher level of orchestration from the entrepreneur is needed for the
coordination of the different stakeholders’ contributions to value cre-
ation. As a second managerial implication, a way to compensate for high
complexity is by setting up specific requirements for the contribution
to the platform, and only those that will fulfil the specific requirements
for the solution will be chosen as a kind of ‘pick-and-choose’ selection
strategy with relatively low transaction costs (Hollensen et al., 2020).
Platform orchestration with sharing-economy entrepreneurs can be seen
as an important aspect of platform capabilities, where the entrepreneur
(orchestrator) must take advantage of the external resources and not only
focus on own resource ownership.
Apte and Davis (2019) stated that the scalability of the business model
is a critical task for the sharing-economy entrepreneurs. Further research
is needed to understand how companies extend their existing business
model, introduce additional business models and/or replace elements of
the existing business model (Ramdani et al., 2019). The entrepreneurs
need to be aware of the necessity of developing the business model in par-
allel with the expansion of their business from both an early stage period
of the start-up to the later stages of enterprise development, firm growth
and the expansion of the business from a regional to an international
level. From a marketing perspective, a platform-based business model
13

may enable entrepreneurs to balance off potential barriers to market
penetration when managing the platform as a key resource.
Acknowledgement
This project benefitted from funding opportunities provided by the
Research group ‘Business Development and Governance’ of Østfold
University College, Norway, during 2019. The research group was
established in December 2017 by Birgit Leick and Mehtap Aldogan
Eklund, and between 2018 and 2019, they were leaders of the group.
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43
2
Digital Subsistence Entrepreneurs
in Developed Countries
Opportunities and Limitations of
Peer-to-Peer Platforms
Eva Delacroix, Florence Benoit-Moreau,
and Béatrice Parguel
Introduction
Digital entrepreneurs are generally described as young, urban and well-
trained entrepreneurs, displaying influential social networks and a com-
bination of up- to-
date technical and business capacities (Arvidsson,
2019). Far from this stereotyped portrait, a new type of entrepreneur has
recently appeared in developed countries: the digital subsistence entre-
preneur. Bridging the gap between digital and subsistence entrepreneurs
may appear a little daring as the latter generally trigger the contrasting
image of poor micro-entrepreneurs selling rice cakes in India. Yet, by
encouraging informal digital markets that closely resemble the livelihood
markets described in developing countries (Viswanathan et al., 2010;
Viswanathan et al., 2012), peer-to-peer (P2P) platforms have become
places where anyone can find subsistence opportunities.
Indeed, the promoters of the P2P economy praise its ability to empower
the precarious by offering self-employment opportunities. In contrast,
its detractors refer to it as the “gig economy” to highlight exploitation,
poor social security benefits and no real efficacy as a solution to exclu-
sion. Considering this heated debate, this chapter explores the poten-
tial of P2P platforms to cope with poverty in developed countries. This
question is of the utmost importance given the growing number of people
currently facing financial hardship in developed countries (e.g. students,
unemployed, undocumented migrants), especially in a Covid-19 crisis
period. More precisely, this chapter investigates how P2P platforms
digitally enable subsistence entrepreneurs and raises questions about the
benefits and limitations of P2P platforms in terms of helping them cope
with poverty. As such, it describes a new figure of the sharing economy:
the digital subsistence entrepreneur.
To fill the gap in the literature, the first section documents how P2P
platforms are allowing subsistence entrepreneurs to reappear in developed
countries. The second and third sections then propose a balanced review
of their benefits for deprived populations, but also of the criticism they
53
Digital Subsistence Entrepreneurs 35

fuel. To do this, we mainly rely on a literature review on subsistence
entrepreneurship in the sharing economy, based on a search using self-
employment /micro- entrepreneurship /subsistence entrepreneurship
X sharing /collaborative /peer-to-peer /on-demand /gig economy as
keywords. We also rely on qualitative field data collected among women
living below the poverty threshold in France, who have developed a
business on Facebook buy-and-sell groups and/or have themselves bought
items from other impoverished female micro-entrepreneurs (see Delacroix
et al., 2019).1 Additionally, we gained insight from unpublished qualita-
tive data collected from African and Syrian refugees living in France and
Belgium.2 To go further and reconcile opposing views about the potential
of P2P platforms to digitally enable micro-entrepreneurs, the discussion
section finally distinguishes between different types of P2P platforms and
concludes with recommendations for public policy makers.
The Resurgence of Subsistence Entrepreneurship in Developed

Countries
A Historical Perspective
Running a small business was for a long time part of the survival strat-
egies used by impoverished families between the 17th and 19th cen-
turies in Europe. It was very easy for anyone to sell all kinds of items,
from farming, hunting and fishing products to small crafts and services
(Fontaine, 2014). However, beginning in the 18th century, the poorer
members of society gradually became excluded from most of the markets
to which they previously had access as vendors. The introduction of
safety and hygiene standards for the trade of second-hand goods and
foodstuffs, combined with urban restructuring (e.g. the disappearance in
England of open-air markets, which were replaced by covered markets
where stalls now had to be rented), the rise in taxation (e.g. the introduc-
tion of a business tax in France in 1791) and competition from formal
traders, steadily chased away the weakest (e.g. women and migrants) and
poorest members of society. Those unable to come up with the necessary
increase in capital to remain in business and meet the new standards were
squeezed out. Their eviction from institutionalized market spaces did
not however prevent the poor from continuing to engage in small-scale
lucrative activities within their neighbourhood communities. In indus-
trial Europe, working-class housing estates placed great importance on
domestic links and unneighbourly relationships. As described by Hoggart
(1957), in England’s working-class neighbourhoods, almost every street
displayed small ads pinned to a noticeboard designed for that purpose,
allowing residents to engage in all kinds of transactions.
During the 20th century, several factors contributed to the disappear-
ance of the informal economy. The urban planning policies which, from
the 1950s to the 1970s, led to the relocation of the working classes in
63
36 Eva Delacroix et al.

large housing units replaced unneighbourly relationships with anonymity.
Residents of impoverished areas socialize very little with one another
and do not develop the social networks that would be necessary for the
survival of their “home-based businesses” (Saatcioglu & Corus, 2014).
With the erosion of social links in poorer areas, the informal economic
activities from which these areas once benefited are left impoverished.
Europe’s small- scale street sellers have clearly been unsuccessful in
having their right to work recognized. After disappearing from the urban
landscape, effectively marking the destruction of Europe’s subsistence
markets in the 20th century (Bennholdt-Thomsen & Mies, 1999), sub-
sistence entrepreneurs have recently re-emerged along with the rise in
self-employment.
Self-employment in developed countries has increased significantly in
the last decade. The ratio of self-employed to employed workers changed
from 1:8.3 in 1997 to 1:6 in 2019 in the U.S. (Fortune, 2018). According
to the McKinsey Global Institute (Manyika et al., 2016), in 2016, 20%–
30% of the European and U.S. working-age population was engaged in
some form of self-employed activities, whether a primary versus sup-
plemental source of income or chosen versus accepted out of necessity.
Among those engaged in self-employment out of necessity, the “reluc-
tant” (14%) make it their primary source of income as they cannot find
any proper job, while the “financially strapped” (16%) aim to earn extra
money to make ends meet. With the 2008 economic crisis, P2P platforms
largely contributed to this tremendous increase in self- employment
in developed countries in the last decade, especially amongst deprived
populations.
By connecting people, P2P platforms create a range of opportunities
for giving, lending, bartering and selling goods and services, making it
possible for anyone to set up a small business. As such, they provide
the poorest members of society with opportunities to re-appropriate the
market. They allow users to earn money in a range of ways, such as
performing various types of online tasks, driving for ride-hailing ser-
vices, cleaning someone’s home, sharing their possessions with others
or selling their used goods or personal creations. Ride-hailing platforms
like Uber or Lyft benefit people lacking other job opportunities or in
need of supplementary income (Rosenblat, 2016). We also observe that
Facebook buy-and-sell groups allow people at the margins to start their
own micro-entrepreneurial activity. P2P platforms gave birth to digital
subsistence entrepreneurs, a new type of entrepreneur similar to micro-
entrepreneurs or “necessity- driven” entrepreneurs, i.e. those that are
pushed into starting a business due to unfavourable circumstances (e.g.
losing a job, juggling work with family responsibilities, living in poverty)
(Viswanathan et al., 2010; Viswanathan et al., 2014). Subsistence entre-
preneurship dynamics have been well described for developing countries,
where it represents an active and visible part of the economy (e.g. Mai
et al., 2014; Viswanathan et al., 2014), and where billions of poor people
73

are entrepreneurs (Khanna, 2007).3 However, little is known about sub-
sistence entrepreneurship in more developed countries today.
How Did P2P Platforms Allow Subsistence Entrepreneurs

to Reappear in Developed Countries?
P2P platforms have restored the conditions conducive to the re-emergence
of subsistence markets in developed countries in different ways.
First, they reduce costs and mitigate some barriers to entry that especially
challenge micro-entrepreneurship (Martin, 2004; Millman et al., 2009;
Morris et al., 2020). Among these barriers are limited social networks and
access to solvent clients, but also lack of money, lack of time from taking on
multiple jobs or childcare and lack of business literacy regarding business
development, pricing, marketing or bookkeeping. P2P platforms also miti-
gate institutional and legal barriers as they are governed either by informal
rules inspired by non-market logics, or by the platforms themselves, which
are accountable for legal or fiscal matters (Laurell & Sandström, 2017).
Moreover, by allowing supply and demand to meet at zero marginal cost
(Rifkin, 2014) and achieve critical mass (Botsman & Rogers, 2011) with
minimal intermediary costs, P2P platforms create a market for skills and
services undervalued in the formal job market, or the existence of very
small niche markets that would otherwise be unprofitable (e.g. offering to
fix a broken toilet). Consequently, these platforms currently host millions
of entrepreneurial ventures (Chandna & Salimath, 2018) and specifically
benefit deprived people who lack sufficient financial, technical, relational
or institutional resources to start a more traditional business.
Second, by creating the possibility of digitally intermediated exchanges
in horizontal social relationships (Barnes & Mattsson, 2016), P2P
platforms underpin the rebirth of subsistence entrepreneurship because
they recreate three forms of social capital (Delacroix et al., 2019). From
a structural perspective, they often operate on a local basis, providing
entrepreneurs with the resources of geographical proximity. From a cog-
nitive perspective, they fuel a sense of belonging to the same commu-
nity and the perception of common expectations, norms and obligations.
From a relational perspective, they display specific features to manage
trust such as scores or word-of-mouth recommendations. Restoring these
three forms of social capital, P2P platforms facilitate social interactions,
make transactions more productive and provide deprived populations
with an access to the market. As such, social capital is as critical to sub-
sistence entrepreneurship in developed countries as it is in developing
ones (Viswanathan et al., 2010; Viswanathan et al., 2014).
In sum, P2P platforms relax some of the constraints micro-entrepreneurs
face when starting a business, especially if deprived, explaining the emer-
gence of digital subsistence entrepreneurs in developed countries. In the
next section, we explore the benefits that these new entrepreneurs can
derive from their micro-entrepreneurial experience.
83
Benefits of P2P Platforms for Subsistence Entrepreneurs

As research on subsistence entrepreneurship has focused on developing
countries (Bruton et al., 2013), the potential for poor people from
developed countries to create their own jobs has been underestimated in
most discussions about poverty (Morris et al., 2020). Still, entrepreneur-
ship has been shown in recent field studies to reduce poverty in developed
countries. In a ground study conducted over a six-year period in the U.S.,
Slivinski (2015) shows that higher rates of entrepreneurship among the
poor are associated with the largest reductions in poverty. Considering
over 400 individuals running micro-business for five years in the U.S.,
Clark et al. (1999) also show that 72% of micro-entrepreneurs increased
their household income over the period, with 53% of them moving out of
poverty. Seen in this light, the multiple sources of micro-entrepreneurship
that have accompanied the development of P2P platforms provide new
opportunities for the poor. Observing low-income U.S. residents and com-
munities in 2009, Thompson Jackson had already noted that “increas-
ingly those at the margins of our economy and society are seeing digital
entrepreneurship as a means of improving their livelihoods” (2009: 198).
In this section, we focus on the specific opportunities derived from the
emergence of P2P platforms.
Economic Benefits
In a context where working opportunities are scarce, deprived people are
often left with part-time, low-paid jobs with fragmented hours that are
“not worth it” from an economic point of view, especially if the costs
of transportation and childcare are taken into consideration. Rosenblat
(2016) shows that a significant proportion of Uber and Lyft drivers, espe-
cially among the least educated, had no other economic opportunity in
their geographic area. We also met low-income mothers who had no other
choice but to create small businesses on the internet, selling second-hand
items, arts-and-crafts or services such as gardening or sewing. The primary
benefit derived from independent work on digital P2P platforms is there-
fore economic in nature. Such earnings represent a secondary income for
56% of gig workers (Manyika et al. 2016). We observed that this income
is often used to improve the family’s quality of life with purchases like
better quality food, a vacation or day trips for the children, or items that
facilitate social integration (e.g. clothes) or improve health (e.g. glasses).
Furthermore, the P2P economy promotes individual economic
empowerment, as it constitutes a shift from capitalism, where access is
more important than possession (Botsman & Rogers, 2011). It allows
anyone to monetize idle assets, and it makes things more affordable for
people on lower incomes. This suggests it also allows a fairer and more
sustainable redistribution of resources by reducing the cost of accessing
products and services.
93
Relational and Symbolic Benefits

Beyond economic benefits, relational and symbolic benefits appear to
be important motivations among digital subsistence entrepreneurs.
Regarding relational benefits, Rosenblat (2016) observes that driving is a
pleasant activity for a significant proportion of Uber and Lyft drivers, espe-
cially for the elderly and retired, because they can converse with clients.
Meeting new people is also a positive consequence of small commercial
activities on Facebook buy-and-sell groups (Delacroix et al., 2019): the
relationships between sellers and buyers can remain virtual, but when
transactions require a physical meeting, they sometimes turn into long-
lasting real-life friendships. On P2P platforms, entrepreneurs can socialize
and visualize themselves as belonging to a real community (Lemaitre &
de Barnier, 2015). Deprived populations are often poorly socialized, and
the relational benefits they derive from their small businesses contribute
to their psychological well-being. This might be especially relevant to an
ageing population facing both loneliness and low pensions.
Running a small business also demonstrates one’s capacities and
enhances self-confidence for deprived people, often damned by a lack
of academic success. As an illustration, deprived mothers operating on
Facebook buy-and-sell groups value the recognition of skills unrelated
to motherhood, often for the first time in their life (Delacroix et al.,
2019): the positive comments received on Facebook reinforce their self-
confidence and make them feel they are worth something. Ultimately,
running a small business improves self-esteem, which, in turn, gives
subsistence entrepreneurs an opportunity to enhance roles in the house-
hold, especially among women, who turn out to be more than “just”
mothers.
Increase in Life Satisfaction

Earning one’s own money and demonstrating one’s capacity to create
a business is a source of satisfaction in itself. Beyond this, digital inde-
pendent work allows more flexibility in choosing when and where to
work than any other employment opportunities for deprived people.
Icham, a Syrian refugee, quit his job as a waiter in a restaurant to become
a driver for UberEats, the only job that, according to him, gives him
enough flexibility to take intensive French lessons. For mothers with
small children, self-
employment is motivated by the ability to work
from home with a flexible schedule (Jeon & Ostrovsky, 2019). We met
Cécile, who left her job at a chip shop where she worked from 11am
to 2pm, then 5pm to 11pm including weekends, to earn the minimum
wage. As well as the low wage, this inconvenient schedule was incom-
patible with her situation as a single mother, and Cécile finally decided
to live on welfare and earn money from her small-scale activities in the
informal market. Beaumont (2016) also reports that the sharing economy
04

has boosted female employment in Poland, where the employment rate
among women was below the European average.
It should also be noted that paid employment for deprived people usu-
ally takes place in hierarchical organizations where employees need to
obey the orders of their superiors. As such, gaining control over one’s
life increases independent workers’ life satisfaction (Boeri et al., 2020),
which is perhaps even more true for millennials entering the workplace,
as they reject the traditional 9-to-5 job model. So self-employed people
are generally more satisfied with their lives than paid employees, to the
point that self-employment can even help overcome the low life satisfac-
tion scores associated with low-skilled, blue-collar work (Hessels et al.,
2018). Low-skilled self-employed workers are actually more likely than
paid employees to consider their work meaningful and challenging, in
contrast to unpleasant jobs, which are usually the only ones open to them
(e.g. house cleaning, personal care for old people or night work).
A Transition Status towards Entrepreneurship

As explained above, P2P platforms give deprived people access to markets.
This is the promise of Uber, which presents itself as a marketplace where
independent drivers can find their clients. According to Sundararajan
(2014: 5), these platforms are the “new engines for innovation by cre-
ating micro- entrepreneurship opportunities that empower individuals
previously constrained by employment at traditional corporations”. They
can be a springboard for more sustainable businesses as they make it
possible for anyone to start a small business at very low expense. For
example, Etsy allows small vendors to open an online store instantly and
gives them access to a market where they can test their entrepreneurial
ideas. We met Melinda, 32, a mother of two young children who started
her clothing business on Facebook before developing it on another scale
by becoming a street vendor at open-air markets. Three years later, she
has three employees and a good income.
Managing a business on P2P platforms, whatever its future, increases
commercial skills. We observed how poorly educated women develop
marketplace skills while running their business. On Facebook, they can
create a page for their business with a brand name and other features that
make it look like a real store. They use advertising claims, promotional
discounts and client relationship management techniques in a very profes-
sional way, and also adjust their production to expected sales (e.g. events
such as Mothers’ Day). Juge et al. (2019) also point out that women
operating on wardrobe sales P2P platforms develop all the professional
skills usually found in a traditional business (e.g. purchasing, marketing/
sales, finance/accounting, information systems and logistics). Ultimately,
by developing new marketplace skills and enhancing self- confidence,
self-employment can be the initial step towards a real entrepreneurial
activity that goes onto be successful or a more interesting paid job for
14

deprived people, though Boeri et al. (2020) consider this to be a limited
phenomenon.
Limitations of P2P Platforms for Subsistence Entrepreneurs

Criticisms of P2P platforms raise key questions about their ability to alle-
viate poverty and unemployment.
Do P2P Platforms Really Improve Deprived People’s Lives

or Exploit Them?
P2P platforms portray themselves as providing opportunities for micro-
entrepreneurs to run their own small business with minimal start-up
costs, but tenants of the opposite view claim that participants oper-
ating on some of these platforms are disempowered people, lacking the
benefit of both entrepreneurship and traditional employment (Kuhn &
Maleki, 2017). Most of them earn less than their peers in traditional
work, are vulnerable to workplace abuse, have a heightened sense of
job insecurity and experience stress (Davis, 2015; Friedman, 2014; Tran
& Sokas, 2017). Many would like to have better working conditions:
they admit a strong distaste for irregular and short-notice scheduling
(Mas & Pallais, 2017), express a strong demand for social protection
and are willing to pay in order to get better insurance coverage (Boeri
et al., 2020). Additionally, a significant proportion of them would prefer
a stable working environment over the uncertainty of gig employment
(Ahsan, 2020). Uber for instance does not follow regulations on work-
place safety, minimum wage, or overtime, nor does it offer benefits such
as healthcare or paid leave. Its drivers earn less money than 90% of their
peers in traditional work (Mishel, 2018). Pursuing something more than
just survival, a few P2P workers may develop a more lasting project, in
which platforms can play a facilitating role. But the majority of people
will never go on to expand their business beyond the few euros that allow
them to improve their daily living conditions, and would gladly exchange
these “improvised” activities for a long-term salaried position compatible
with the constraints of domestic life. Their activities are more about sur-
vival than any real entrepreneurial objectives.
Do P2P Platforms Mitigate All Barriers Impeding Access

to Entrepreneurship?
As mentioned earlier, P2P platforms mitigate different obstacles to
successful micro-entrepreneurship: difficulties accessing the market, the
lack of digital literacy, legal and fiscal knowledge and, above all, the lack
of social capital. However, if we take a closer look at the barriers identi-
fied by Morris et al.(2020), we notice that many of them are significant.
Financial resources remain scarce and impede even minimal investments
24

such as tools or equipment. We met Isabelle, who had started a lucra-
tive business of selling jewellery on Etsy but had to stop because she
could no longer afford to invest in stock. A narrow skillset can also limit
venture types and reduce opportunities to stand out from other micro-
entrepreneurs within the same community. In the community of migrants
from Mali, it is commonplace for women to run a business importing
African fabrics, and for men to sell second-hand computer equipment,
and with so many people offering the same products, it is almost impos-
sible to differentiate from each other and reach profitability. Other
limitations include the lack of transportation to reach solvent clients
living in wealthier neighbourhoods. P2P platforms alleviate part of the
geographical barriers between providers and consumers, but not all of
them when it is about physical services such as house cleaning or home
improvements. Even if P2P platforms restore social capital and trust
through evaluation or rating devices, deficits in literacy or understanding
social codes are not magically solved and limit the strength of social ties.
More interestingly, poor micro-entrepreneurs lack entrepreneurial role
models or mentors, guidance and direction when it comes to business
decisions, making it difficult for them to set ambitions for their business
even if it has true potential. Again, P2P platforms offer limited help as
regards these obstacles.
Are People Operating on P2P Platforms Real Entrepreneurs?

Finally, the crucial question raised by the activities driven by P2P platforms
is the following: can we consider them to constitute entrepreneurship?
Are all forms of self-employment entrepreneurship? Skrzek-Lubasińska
and Szaban (2019) provide the OECD’s definition of self-employment: “a
survival strategy for those who cannot find any other means of earning
an income or as evidence of entrepreneurial spirit and a desire to be one’s
own boss”. This definition echoes the dichotomy between necessity entre-
preneurship and opportunity entrepreneurship. Does this imply a com-
plete rift between the digital subsistence worker and the happy digital
entrepreneur? Is there a possibility to switch from one to another to cope
with poverty and exclusion? Is it a binary categorization or a continuum?
This requires further consideration of what we mean by entrepreneurship.
Autonomy characterizes entrepreneurship. However, certain platforms
have complete control in defining the service and setting the timing and
price, taking a significant commission on each job. For example, Uber
sets its quality standards (e.g. type of car, minimum rating of 4.6 stars)
and prices and scrutinizes each driver’s actions with algorithms. Thus,
autonomy is an illusion since workers operate under surveillance and
control:
workers in the sharing economy, particularly those at the low end of

the skilled spectrum, aren’t entrepreneurs in some grand and heroic
34

sense, but are in fact vulnerable and marginalised workers who not
only have to labor long hours for relatively low pay, but being inde-
pendent contractors also have to take on the risk of work.
(Ahsan 2020, p. 24)
The lack of autonomy is reinforced when micro-entrepreneurs are fully

dependent on one specific platform instead of having the choice between
several tasks via different platforms. Lyft, Uber and Deliveroo also retain
total control over business relationships, with limited opportunities for
drivers to leverage their client portfolio for future business opportunities.
In contrast, buy-and-sell activities on Facebook or Etsy leave more room
to build real and direct relationships and capitalize on them.
Following Schumpeter’s view (1934), Skrzek-Lubasińska and Szaban
(2019) introduce another dimension to characterize entrepreneurship: the
degree of innovativeness. Schumpeter distinguishes between two types of
businesses: (1) innovative and (2) replicative, the former being associated
with real entrepreneurship. Innovativeness can be found in the intro-
duction of a new product or service, the opening of a new market for
existing products or the application of new methods. In our field study
involving deprived mothers, we met Sylvie, who came up with the idea of
selling affordable home-made take-away meals for people going fishing
on Sundays, or Patricia, a self-made seamstress who makes customized
cushions for caravans, a very popular vehicle among low-income fam-
ilies. Innovativeness means differentiation and opportunities to create
value, which, in turn, is the key to transforming a trial into a sustain-
able small business. Again, platforms such as Facebook, Etsy or Craigslist
allow for more innovativeness in the way people frame their offer. On
Facebook buy-and-sell groups, poor women particularly enjoy reflecting
on and deciding how to present their offer, choosing as many pictures as
they want, setting the prices and leaving no or little commission to the
platform (Delacroix, Parguel & Benoît-Moreau, 2019).
Considering different criteria that define entrepreneurship in this
way departs from a binary vision of opportunity versus necessity-driven
entrepreneurship and instead points to a continuum and thus a dynamic
trajectory for the digital subsistence entrepreneur towards lasting entre-
preneurship. In this respect, different types of platforms may lead to
different contexts in which to develop autonomy and innovativeness.
Discussion
As we have seen, in times of economic crisis micro-entrepreneurship
projects are sometimes the only available option to make a living, espe-
cially for low-
skilled workers, and provide interesting relational and
symbolic benefits beyond economic benefits. P2P platforms have recently
enabled deprived people to engage in such projects on an unprecedented
scale. This results in many developed countries that face structural
4

unemployment problems for decades envisaging entrepreneurship as a
means to alleviate the hardship of unemployed and financially constrained
citizens. As Danson et al. (2020, in press) point out: “A key strategic eco-
nomic development approach of successive UK governments, reflecting
policies and practices in other countries at the EU level, has been to pro-
mote independent business or self-employment where there is a lack of
employment opportunities”. In a recent article, Morris et al. (2020) also
examine entrepreneurship as a solution to poverty in developed coun-
tries. Considering how poverty conditions negatively impact venture
creation, they propose a complete and supportive framework to over-
come these challenges. From this perspective, governments might support
public policy programs that provide specific assistance to digital sub-
sistence entrepreneurs. However, such support might not be blind: the
platform economy has now gained maturity. Digital entrepreneurship
encompasses many different situations that are not always synonymous
with emancipation and requires different approaches.
Defining and Acknowledging the Heterogeneity of Digital

Subsistence Entrepreneurs
Though Delacroix et al. (2019) identified digital subsistence entrepreneurs
as a new type of entrepreneur that has recently emerged in developed coun-
tries, they did not provide any proper definition. In the present chapter, and
based on a distinction between different types of P2P platforms, we pro-
pose to fill this gap and define them as follows: poor individuals engaging
in emancipating activities with the aim of exploiting the business oppor-
tunities made available by digital technologies. Contrary to Di Domenico
et al.’s (2014) recommendation, this definition includes those who would
not define themselves as “entrepreneurs”, a term not necessarily widely
used among deprived populations. Furthermore, this definition does not
consider the motivation for self-employment, whether pull factors such
as independence, satisfaction or flexibility, or push factors such as lack of
a regular job (Skrzek-Lubasińska & Szaban, 2019). However, this defin-
ition is in line with the common notion of individuals exploiting market
opportunities through innovation, which has been generally recognized
since the seminal work of Schumpeter (1934) on entrepreneurs. In this
vein, we recommend a distinction between P2P platforms.
Three types of platforms should be distinguished from one another
in line with Frenken and Schor (2017). On-demand platforms relate
to P2P service provision, such as a ride, a handyman, a house cleaner
or a cooked meal. Typical on-demand platforms are Uber, Lyft or Task
Rabbit. Most of the criticisms made against the P2P economy refer to
such platforms, but as we have demonstrated, working on P2P platforms,
even on-demand ones, also comes with benefits for the deprived, who, in
certain cases, would not have had other options. Sharing platforms result
in “consumers granting each other temporary access to under-utilized
54

physical assets (‘idle capacity’), possibly for money” (Frenken & Schor,
2017, p. 5). Examples of goods shared are cars, homes and boats. People
with less “idle capacity” derive less in absolute terms from the sharing
economy than the most affluent consumers, but can still benefit from
marginal earnings (for example, an old lady renting a room in her flat in
order to make ends meet). Buy-and-sell platforms are platforms where
goods are being exchanged for permanent access (e.g. Etsy, Craigslist,
Facebook) and services are also sometimes proposed (e.g. cooking,
nailing, gardening). Such platforms are mere intermediaries between sel-
lers and buyers, do not impose prices or quality and only take a reason-
able share of sales (e.g. 10% approximately on Etsy).
We contend that some offerors operating on these P2P platforms can
barely be labelled “entrepreneurs”, including those operating on on-
demand platforms, who lack autonomy and do not capture the value being
created, and those operating on sharing platforms, who simply monetize
under-utilized assets (e.g. an unused spare bedroom in their apartment, a
ride they would have done anyway). On the contrary, those operating on
buy-and-sell platforms can be called entrepreneurs since they can display
both autonomy and innovativeness in relation to offers, prices, quality,
client relationship management, visual presentation, etc. We advocate
that such platforms deserve the attention of all actors engaged in poverty
alleviation programs.
Recommendations to Support Subsistence Digital

Entrepreneurship on Buy-and-Sell Platforms
Subsistence entrepreneurship on buy- and-sell platforms should be
encouraged by public policy initiatives and social welfare programs
because it empowers unemployed and financially constrained citizens. We
discuss three challenges that need to be addressed in order to improve the
creation and survival of these ventures.
The main challenge for subsistence entrepreneurs is their lack of finan-
cial resources. The poor have difficulties accessing primary sources of
start-up money (personal savings, family and friends, debt financing and
equity investments) (Morris et al., 2020). Their low credit score makes
it almost impossible to obtain a loan from a financial institution or an
angel investor. As mentioned by Morris et al. (2020), the solution rests in
initiatives that facilitate the expansion of microcredit,4 crowdfunding5 and
Rotating Savings Credit Associations (ROSCAs).6 However, since a sig-
nificant part of their activity is informal, there is a strong reluctance from
subsistence entrepreneurs to turn to institutional actors such as micro-
credit banks. As a matter of consequence, an overly punitive approach
to this kind of “under-the-radar venture” would ultimately destroy the
first manifestations of their entrepreneurial culture (Williams, 2009) and
deter promising initiatives. Policy makers planning to tax the substantial
revenue generated by P2P platforms must consider that such taxation
64

could deter digital subsistence entrepreneurs for at least two reasons.
First, these usually non-taxable entrepreneurs may fear the burden of
reporting the small amounts they derive from their sharing activities.
Second, as declaring these amounts could carry the risk of receiving lower
unemployment or other state benefits, they could give up their subsist-
ence micro-businesses. To avoid that, interesting options could include
a reduced tax rate up to a specific threshold for informal earnings (e.g.
10% up to €5,100 in Belgium) or setting an income threshold below
which informal earnings are explicitly tolerated (e.g. £1,000 for trading
income, the same tax-free allowance for property income in the U.K.).
This would also make it possible to tax digital subsistence entrepreneurs
differently from those operating on on-demand platforms or from the
wealthy entrepreneurs operating on sharing platforms. For example,
those using Airbnb as a real estate business should pay regular taxes and
not be allowed to engage in unfair competition with traditional players
from the hospitality industry, whereas those occasionally sharing idle
space in their home to make ends meet should enjoy certain advantages.
Furthermore, a deduction at source would simplify taxation for both
digital subsistence entrepreneurs and the tax authorities.
The poor are excluded from the existing entrepreneurial ecosystems
(incubators, coworking spaces, business angels, Fab Labs) and creating
inclusive entrepreneurial ecosystems with supportive communities and
infrastructure should be a priority. In the first place, rather than fighting
subsistence entrepreneurs’ initiatives, the public authorities should adopt
the right tools to identify and support the most promising small businesses.
From this perspective, unemployment advisers may be relevant potential
levers. They could help identify individual initiatives and offer subsist-
ence entrepreneurs the chance to enrol in specific training programs to
develop business literacy (e.g. business development, pricing, marketing,
bookkeeping), along with technical, legal and fiscal knowledge. Public
policy makers should also develop a support ecosystem providing the
structures and legal mechanisms that can turn subsistence entrepreneur-
ship into something more. This might include supporting specific ad hoc
organizations, such as “do it yourself laboratories” that would not only
provide technical skills but above all managerial skills and where successful
entrepreneurs could mentor and help subsistence entrepreneurs in specific
incubators offering resources and help. Role models and knowledge are
important (Morris et al., 2020). Other ad hoc organizations would be
needed to provide microcredit solutions or bank guarantees, along with
dedicated tools (e.g. legal self-employment status, toolbox to launch a
micro-business) or specific solutions to access storage spaces or means
of transportation. In France, Kedge Business School recently launched an
entrepreneurial school dedicated to deprived young people, in partnership
with the public authorities, NGOs and economic stakeholders.
Helping digital subsistence entrepreneurs access broader and more
profitable markets deserves public policy attention. As developed
74

previously, buy-and-sell platforms facilitate access to small markets in
order to sell one’s products and services. However, several challenges
remain and once a business has been launched, it must reach an
economy of scale to be profitable. Public procurement could be a way
to facilitate access to broader markets, especially at the local level. For
example, subsistence entrepreneurs could be considered as providers of
products, gifts or goods for local citizens for Christmas or in specific
events. Recently some French municipalities ordered protective fabric
against the coronavirus from local seamstresses to address the challenge
of limited stocks. We interviewed one such seamstress who mentioned
on Facebook both the satisfaction and pride she felt in having sewn 440
masks. Microfranchising is another way to develop and promote small
businesses that the poor can afford to enter and operate. Microfranchising
is an adaptation of the franchise business model that provides a replic-
able business-in-a-box project by following mentoring, marketing and
operational concepts. It reduces risk, and enables the microentrepreneur
to access established networks and markets (Jones Christensen et al.,
2010). It is also an alternative to on-demand platforms, where the parent
organization is a social company or an NGO, and where profits are
fairly redistributed. The French microcredit company ADIE has created
several microfranchises in the gardening, personal care, handiwork
assistance or driving sectors.
Regarding subsistence entrepreneurs specifically using P2P platforms
in the on-demand economy, such as Uber and Lyft drivers, public policy
makers should be more cautious. While early forms of P2P platforms
operating on the accommodation, transportation, venture finan-
cing, lending and labor provision markets emerged as small grassroots
initiatives, today the growth of the P2P economy is driven by platforms
that are owned by shareholder corporations and funded by significant
venture capital (Cohen & Sundararajan, 2015). Companies operating in
the P2P on-demand economy should perhaps be required to respect a
number of rights more strictly than those who actually work for them,
especially given that they mostly rely on self-employed workers from
deprived populations. Workers need protection (Kuhn & Maleki, 2017),
which means going beyond self-regulation. While some, such as Edelman
(2017), have made radical recommendations (“Uber can’t be fixed, it’s
time for regulators to shut it down”), others are calling for the creation
of a new status or of specific social protection funds.
Finally, we recommend that academics extend research on digital sub-
sistence entrepreneurship. We particularly call for longitudinal studies to
further explore the processes by which the experience of ad hoc micro-
entrepreneurship can turn into a real sustainable venture or salaried
long-term work. What are the characteristics of the digital subsistence
entrepreneurs who succeed? What are the obstacles they have to over-
come and what are the best public policy instruments to help them?
Whatever the policies to be considered for implementation, they should
84

consider the viewpoint of digital subsistence entrepreneurs so that appro-
priate decisions can be taken.
Notes
1 This research was conducted in the heart of the Hénin-Beaumont-Lens former
mining area, which had some of the highest unemployment and poverty rates in
France (INSEE, 2016). We focused on women because of their central position
in subsistence entrepreneurship activities (Duflo, 2012). Since our goal was
to understand how poor families made sense of their experience on Facebook
buy-and-sell groups, we used an interpretative phenomenological approach
based on mixed methods (Smith et al.,, 2009). Data collection included 10 in-
depth interviews, an 18-month netnography in relevant Facebook groups and
the completion of ten transactions in the role of an anonymous buyer (see the
original article for more details).
2 The referenced material is still in the data collection phase and is therefore used
only to further illustrate arguments from the literature.
3 Forty-four percent of the people living in urban areas across 18 poor coun-
tries operate their own small-scale business (Banerjee & Duflo, 2011). For
example, 47%–69% of households living on less than two dollars a day in
Peru, Indonesia, Pakistan and Nicaragua run a nonagricultural “business”
(Banerjee & Duflo, 2007).
4 See Adie as an example https://www.adie.org/
5 See Kiva as an example https://www.kiva.org/
6 ROSCAs, often called tontines, are associations where members monthly pool a
certain amount of money into a common fund, and a single member withdraws
the money from it when needed (for example, to finance an equipment).
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25
3
Digital Entrepreneurship across P2P,
B2C and B2B Contexts
A Bibliometric Analysis
Deconstructing Extant Research on
Sharing Economy Business Models
Karl Joachim Breunig, Henrik Johansen,
and Jørgen Røste Kristiansen
Introduction
Digital transformation requires businesses to rethink and innovate their
business models. Li et al. (2018) claim that the internet and big data are
currently making an impact on all industries; therefore, businesses need to
reconsider their business models in order to adapt to the environment. As
new forms of businesses evolve, there is an emerging growth of practices
of a sharing economy. A recent search on Google Scholar indicates an
astonishing amount of published research articles for search phrases
such as “digital business models”, 3,080; “digitalization”, 61,800; and
“sharing economy”, 28,000—only since 2016! Another illustration of
the increasing interest in the sharing economy is the recent number of spe-
cial issues addressing the phenomenon (Maurer et al., 2020). In practice,
within Europe’s five most prominent sharing economy sectors, the total
value of transactions is expected to reach €335bn in 2025, from €28bn
in 2015 (Vaughan and Daverio, 2016). This indicates increased attention
to the phenomenon of a sharing economy, for research and practice alike.
Despite an overwhelmingly growing interest in the emerging phe-
nomenon of the sharing economy, it is referred to as an umbrella con-
cept with an inherent variety and unclear dynamics (Trenz et al., 2018;
Wilhelms et al., 2017). To date, there exists no unified definition (Schor,
2014) and the phenomenon remains debated (Martin, 2016). However,
the idea of sharing instead of owning is not new (Belk, 2010; Botsman
& Rogers, 2010; Schor, 2014). Extant research refers to the same phe-
nomenon with terms such as access economy, circular economy, col-
laborative consumption, collaborative economy, gig economy and peer
economy (Bellotti et al., 2015; Strømmen-Bakhtiar & Vinogradov, 2020).
Despite the vast number of interchangeable terms, extant research seems
to agree on some core properties of the phenomenon, including (1) peer
platforms that coordinate, (2) peer providers and (3) peer consumers
35
Digital Entrepreneurship 53
(Botsman & Rogers, 2010; Hamari et al., 2015; OECD, 2016; Schor,
2014). After analysing 125 definitions, Schlagwein et al. (2020) suggest
that commonly addressed core properties of the sharing economy
relate to peer activities of coordinating the sharing of goods or services
through a digital technology platform, without the transfer of ownership.
Consequently, existing research regarding the sharing economy primarily
focuses on issues related to peer-to-peer (P2P) activities of obtaining,
giving or sharing access to goods and services, which are coordinated
through community- based online services (Maurer et al., 2020), and
also concentrates on the P2P business models underpinning the sharing
economy phenomenon (Apte & Davis, 2019; Assadi, 2020; Mosmann &
Klutt, 2020).
Although established business model research (Baden- Fuller &
Haefliger, 2013; Osterwalder & Pigneur, 2010; Teece, 2010; Zott et al.,
2011) emphasizes the distinction between business-to-consumer (B2C)
and business-to-business (B2B) business models, how these established
business model distinctions are related to the P2P patterns described in
the sharing economy literature remains unexplored. A business model
“defines how the enterprise creates and delivers value to customers,
and then converts payments received to profits” (Teece, 2010, p. 173).
Mosmann and Klutt (2020) argue that the sharing can be of a commer-
cial or non-commercial nature; hence, understanding the phenomenon of
the sharing economy could be extended beyond the P2P, B2C and B2B
business models. Therefore, the aim of this study was to assess the extant
research addressing sharing economy business models in order to synthe-
size a foundation upon which subsequent empirical research can be built.
In particular, more research is necessary to address unresolved issues
regarding B2B relations (Grondys, 2019) and placing an emphasis on
commercial aspects (OECD, 2016). Furthermore, Agarwal and Steinmetz
(2019) call for additional research on B2B business models and their
engagement in the sharing economy (Kathan et al., 2016). Moreover,
the lack of theorization of the business model variations underpinning
the sharing economy in general, and in relation to distinctions between
P2P, B2C and B2B in particular, warrants taking stock of extant research
to establish a unified foundation for subsequent research (Maurer et al.,
2020). Therefore, the goal of this study was to address the following
research question: How can the sharing economy business model
variations and similarities be conceptualized beyond P2P and thus
encompass the traditional business model perspectives of B2C and B2B?
In order to address this research ambition, we initiated our study on
February 5, 2020 by examining the extant published academic research
for the timeframe of 1997–2020 through a structured literature search.
Our initial sample contained 1,266 documents. After excluding irrelevant
categories, we had a total of 184 articles for our bibliometric analysis.
Bibliometric analysis refers to “the collection, the handling, and the ana-
lysis of quantitative bibliometric data, derived from scientific publications”
45
54 Karl Joachim Breunig et al.

(Verbeek et al., p. 181 cited in Holand et al., 2019), and it makes it pos-
sible to identify similarities and patterns as well to provide insight into
specific fields of academic research. Bibliometric analysis may be an appro-
priate tool for examining study areas, assessing outputs and outcomes of
investigations and providing objective evaluations of the rapidly growing
research literature (Narin et al., 1994). To conduct the bibliometric ana-
lysis, we applied VOSviewer and identified 19 highly relevant interrelated
sharing economy articles upon which we conducted a content analysis.
This study identified core articles addressing the constituent elements of
the sharing economy business model and illuminated variations and simi-
larities across the P2P, B2C and B2B business models as these are reported
in the extant literature. Discussing these findings against the underlying
theory, we suggest a framework that distinguishes between the P2P, B2C
and B2B sharing economy business models. The proposed framework
extends the theory on the sharing economy by adding further clarification
of the sharing economy business models, thus guiding future research.
Moreover, the framework has implications for practitioners as it can serve
as an important contributor and basis for discussions related to strategic
decisions, thus providing useful information for various structures as well
as value creation and value-capturing activities.
This chapter is structured as follows. First, we present the theoret-
ical underpinnings of digital business models and the sharing economy
concepts. Second, we describe the bibliometric method applied and the
steps taken in the analysis. Third, we reveal the findings from our analysis
and subsequently discuss these findings towards the initial theoretical
underpinnings. Finally, we present a framework distinguishing between
the P2P, B2C and B2B sharing economy business models and conclude
with the implications of the distinctions provided in this framework.
Theoretical Underpinnings of the Main Concepts

The purpose of this chapter is to explain the concept of business models
and how it relates to the sharing economy, thereby illustrating the gaps in
the current theory. The prior theory on business models will be presented
before introducing the current theory on the transition of the sharing
economy as well as business model variations.
Digital Business Models

Recently, “digitalization has been identified as one of the major trends
changing society and business in general” (Parviainen et al., 2017, p. 63;
Veit et al., 2014). Since digitalization has influenced various business
activities, including companies’ business models, “digitalization has put
pressure on companies to reflect on their current strategy and explore new
business opportunities, by transforming their existing business models”
(Rachinger et al., 2019, p. 1143).
5
Hence, digital transformation is a driver for changes in companies’
business models related to changes in their products or services, the
organizational structure and automation of processes (Hess et al., 2016).
Furthermore, the fundamental change in the way businesses operate and
generate value is referred to as a shift towards a digital business model,
which is the missing link between business strategy, processes and infor-
mation technology (Veit et al., 2014). Technology facilitates easy access to
information and customer solutions at a lower cost; hence, it is argued that
businesses need to be more customer-centric (Teece, 2010, p. 172). In terms
of digital transformation, businesses need to re-evaluate their value propos-
itions in terms of understanding the business model design options as well
as the customer needs and technological trajectories (Teece, 2010, p. 173).
Sharing Economy
Driven by the financial collapse in 2008, several firms searched for new
ways to create value and reduce costs (Habibi et al., 2017). Re-creating
value by using existing resources, either for monetary or non-monetary
benefits, contributed to the more efficient use of resources (Botsman &
Rogers, 2010). As a result, the term “sharing economy” was introduced
and opened new ways to deal with capitalism and consumerism (Agarwal
& Steinmetz, 2019). The increased attention regarding the sharing
economy is causing disruption in well-established and mature industries
because consumers are provided with convenient and cost-efficient access
to resources, without the responsibility of ownership (Schor, 2014, p. 4;
Trabucchi et al., 2019).
Defining the sharing economy in a way that reflects common usage has
proven to be difficult due to the wide range of perspectives (Schor, 2014,
p. 3). One recent attempt at a unified definition has been provided by
Plewnia and Guenther (2018, p. 576), who define the sharing economy as
“activities or platforms which facilitate the sharing of material, products,
product services, space, money, workforce, knowledge, or information
based on for-profit or non-profit transactions in a variety of different
market structures”. However, Mosmann and Klutt (2020, p. 40) have
found that the sharing economy is identified across P2P, B2C and B2B
relational patterns. Hence, the literature indicates a shift towards a new
set of business models that emphasize resource exchange rather than
offering new ones (Laamanen et al., 2018, p. 213).
Access to new technology and its potential benefits has been an
interesting topic within the sharing economy as it allows for interaction
between individuals, who do not necessarily know each other, to get in
touch for resource exchange (Schor, 2014, p. 12). Both products and
services are described in the digital business strategy literature as they
both can take advantage of the possibilities within digital resources
(Bharadwaj et al., 2013, p. 474). More user-friendly solutions as a result
of digital improvements is facilitating more comfortable users, which,
65

in turn, can open new business opportunities as a result of increased
quality and quantity of generated data (Bharadwaj et al., 2013, p. 474;
Laamanen et al., 2018, p. 213; Schor, 2014). Digital infrastructure that is
well embedded in the business strategy is seen as a strategic dynamic cap-
ability as it enables the company to scale up or down their infrastructure
in line with the market (Bharadwaj et al., 2013, p. 475).
A sharing platform, consisting of all involved parts, is referred to as a
community where control and coordination are of high importance for
attracting and retaining participants (Mosmann & Klutt, 2020, pp. 40–
41). The decisions regarding market orientation and market structure
are fundamental when shaping the platform’s business model. In terms
of market orientation, sharing economy platforms are either for-profit,
which strive to optimize generated revenue and asset maximization, or
non-profit, in which the primary goal is to serve a community’s needs
rather than seeking growth or revenue maximization (Schor, 2014, pp. 4–
5). A company’s market structure reflects its market orientation, and the
sharing economy literature distinguishes between P2P and B2C. Within
P2P platforms, value capturing is generated through commissions, i.e.,
revenue growth rises with the number of transactions, whereas for B2C
platforms, value capturing occurs through maximizing revenue per trans-
action (Schor, 2014, p. 5). The sharing economy in terms of P2P has
received a lot of attention. P2P is referred to as a multisided platform,
consisting of intermediaries who bring together distinct groups of users
where network effects are said to be a key differentiator when it comes
to value creation (Bharadwaj et al., 2013, p. 475; Jabłoński, 2018).
Communities as the source of value creation indicate a shift in value cre-
ation drivers (Stabell & Fjeldstad, 1998). Analysis conducted by Lang
et al. (2015, p. 787) reveals that the co-creation mechanism within these
communities can minimize the risk of revenue loss and will benefit the
consumers as well as the producers.
Based on the underlying theory related to digital business models and the
sharing economy, we recognize the need for a better overview of the sharing
economy field. We note that much of the literature is based on the sharing
economy as a whole, and it does not differentiate between P2P, B2C and
B2B. Agarwal and Steinmetz (2019, p. 12) suggest that the P2P and B2C
business models within the sharing economy can be variations of each other
but that B2B is rather excluded in the existing literature. This missing link is
also recognized by Grondys (2019) and Kathan et al. (2016) as they argue
that the existing literature, to a large extent, focuses on private sharing and
provides less emphasis on issues related to B2B interactions.
Methodology
In order to clarify the understanding of the ambiguous umbrella-term
“sharing economy” and to identify the P2P, B2C and B2B business
model variations, we conducted a broad and structured search of prior
75
published research. We subsequently conducted a bibliometric analysis
on the retrieved articles in order to distil our search further. There has
been a significant increase in the quantification of science, especially in
the use of bibliographic analysis for evaluation and monitoring of sci-
entific outputs (Verbeek et al., 2002). Fahimnia et al. (2015) promote
some of the strengths associated with bibliometrics. For example, net-
work analysis through bibliometric tools can prove powerful for iden-
tifying established and emerging topical areas. It can also help to
identify the clusters of research and researchers showing how the various
areas of thought may have emerged based on author and institutional
characteristics. Identifying the more influential researchers within the
clusters sets the stage for determining additional emergent study fields
through capturing more recent topics covered by these researchers
(p. 102). The current study applied this method to identify if, and how,
prior research has addressed variations in the B2B, B2C and P2P business
model configurations in order to provide a foundation for future research
and practice. Levy and Ellis (2006, pp. 172–173) support our choice of
a literature review to (1) understand the existing body of knowledge,
(2) provide us with a solid theoretical foundation, (3) substantiate the
presence of the research problem, (4) justify the proposed study as one
that contributes something new and (5) frame the valid research method-
ologies, approach, goals and research question for the proposed study.
Search Procedure and Sample

The structured search and subsequent refinement were performed by
using a database of relevant research articles, and it progressed in sev-
eral stages. Initially, we experimented with several different search phrase
combinations. By using the search string Topic = ((Business-model) AND
Topic = (Digit* OR Sharing- econom*)), without any limitations, we
identified 1,266 documents in an exhaustive search for the period 1997–
2020, enabling us to understand the development of research focusing
on the sharing economy. Then, we limited our search to only include
documents written in English from articles, proceedings, papers, reviews,
editorial material, book chapters and book reviews. Excluding irrelevant
categories and keeping those with 50 or more contributions, our database
was reduced to 809 articles.
In the next stage, we selected all articles with ten or more citations
within the timeframe 1997–2017, resulting in a total of 170 articles; we
read the abstracts of all of these articles. In addition, we selected 397 art-
icles within the timeframe 2018–2020, with no requirement regarding the
number of citations as not much time has passed to be referenced.
With the new sample of 567 articles published between 1997 and
2020, we then conducted a first-order categorization of these articles by
colour coding, based on the relevance for our research question, thus
reducing the sample to 190 relevant articles. We subsequently omitted the
85

most recent articles of 2020 as this year had just started, and bibliometric
analyses of that year would be skewed by the lack of a full year’s publi-
cation. The 2020 articles were read and utilized in the positioning of our
research question. Considering the final limitations and exclusions, our
final literature search sample was 184 articles, which were downloaded
from the Web of Science database.
Three-Phase Analysis
The analysis of the 184 research articles included in our final search also
progressed in three distinct phases. First, we conducted a descriptive
analysis of the overall characteristics of the sample. Subsequently, we
conducted a bibliometric analysis. Finally, we utilized bibliometric ana-
lysis to further distil our sample and identify 19 core research articles
included in a content analysis.
After downloading our final search from the Web of Science database
to Excel, we had the basis for the descriptive analysis. We cleaned up all
data in Excel so that the analytical tool Microsoft Power BI could read the
data and create visualizations. Next, all articles were represented with their
title, author(s), journal, discipline category(s) and publication year. The
descriptive analysis revealed the development within the sharing economy
field as well as the journals that have emphasized the topic and discipline
categories. The purpose of the timeframe was to map out the development
of published articles over the last 22 years, whereas the categorization over-
view aimed to identify the categories to which the articles are allocated. We
also constructed a summary of the top ten journals in terms of published
articles. Subsequently, we utilized basic functions in Excel to make sense of
the data, identifying the core scientific disciplines that had contributed, the
journal type, the ranking of the journals as well as the influence on sharing
economy research by country, year and individual researcher. In the next
stage, we applied the software VOSviewer to the 184 articles downloaded
from the Web of Science database, enabling us to conduct bibliometric ana-
lysis. Bibliometric analysis is the use of statistical methods to analyse books,
articles and other publications. Vosviewer is one of several available software
tools that enables analysis by visualizing several different relations between
downloaded articles, e.g., co-citations or co-occurrence of key terms. To
obtain a visual overview in terms of keyword relevance and citations, we
conducted co-occurrence, co-citation and bibliographic coupling analyses
(Van Eck & Waltman, 2009). These analyses are the most common to study
these types of relations (Ding et al., 2016, p. 285), enabling us to identify
four different clusters and narrowing our dataset down to a core of highly
relevant interrelated sharing economy articles. By calculating network cen-
trality for individual articles related to each of these clusters, we were able to
identify central articles for each cluster. When conducting the co-occurrence
analysis, we saw that both the terms “business model” and “business
models” were represented. In order to obtain a more trustworthy analysis,
95
we created a VOSviewer thesaurus file in addition to the file including all
184 articles to combine those two terms represented as “business model”.
However, we did not combine terms like “digitization” and “digitalization”
as these terms cover different aspects of the digital concept. The bibliometric
analysis was supported by the bibliographic coupling and the analysis of
cluster belongingness, total link strength and citations identifying the most
influential articles. Based on these relationships, the articles were grouped
into clusters. One of the clusters (see the green cluster in Figure 3.4) revealed
39 articles addressing different sharing economy concepts and related terms
describing industry-specific cases or conceptual frameworks, and the 19
most influential articles were selected.
Finally, the bibliometric analysis identified the most influential art-
icles. Furthermore, the abstracts of all 184 articles were read to ensure
high thematic relevance as well as to reduce the risk that we had omitted
relevant articles addressing important distinctions between the P2P, B2C
and B2B sharing economy business models. When we were confident that
our sample of 19 articles was sufficient in terms of influence and rele-
vance, we conducted a content analysis by closely reading the articles and
coding them according to their reference of the P2P, B2C and B2B sharing
economy business models.
Findings
Descriptive and Bibliometric Analysis

Recently, there has been a significant increase in the number of articles
dealing with business and management published in journals related
to sustainability and technology. Due to the exponential increase in
publishing, 75% of the articles included in our analysis were published
between 2017 and 2019. The remaining 25% of the articles published
prior to 2017 were distributed evenly over a fairly flat and stable period
between 1997 and 2011, followed by a gentle increase in 2012, before the
development really gained momentum in 2017 (Figure 3.1).
The co-occurrence analysis (Figure 3.2) was generated in VOSviewer,
by which several analyses were conducted to ensure high thematic rele-
vance of keywords. Cluster two (red) has “sharing economy” as the most
influential keyword, but other closely related terms that were identified
in the theory chapter like “collaborate consumption”, “access- based
consumption”, and “collaborate economy” are represented as well. The
keyword “peer-to-peer” indicates a large amount of sharing economy art-
icles related to P2P, whereas keywords for B2C and B2B are not present.
Cluster one (green) contains keywords related to business models and
strategy, whereas cluster three (blue) consists of keywords related to digi*
concepts like “digital transformation” and “industry 4.0”. Cluster four
(yellow) contains three keywords representing the business model elem-
ents “value creation”, “value capture”, and “value proposition”.
06
80
69
70
60
50
50
Arcles
40
30
19
20
9
10 6 7 7
4
1 2 1 1 2 2 2 2
0 0 0 0 0 0 0
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Year
Figure 3.1 Development of publications per year for the period 1997–

2019
(N = 184).
Figure 3.2 VOSviewer map with co-occurrence analysis.
From the co-citation analysis (Figure 3.3), only the article by Cohen and
Kietzmann (2014) is included in our core articles as the other articles do
not contribute to our research question. The fact that we only managed to
identify one of our core articles in this analysis may be explained by the
point that business models have been studied for a long time, but the sharing
economy is relatively new; hence, there are fewer citations. Another explan-
ation related to the green cluster may be that much has been done in the
16
Figure 3.3 VOSviewer map with co-citation analysis.
Figure 3.4 VOSviewer map with bibliographic coupling analysis.
field of the sharing economy, but there is limited research related to business
models.
We also conducted a bibliographic coupling analysis in VOSviewer
(Figure 3.4). This method is used to identify the most central articles
by separating clusters by colour-coding. Analysis of the green cluster
in Figure 3.4 indicates articles related to different sharing economy
concepts, e.g., industry-specific cases, frameworks and related concepts
that overlap with the sharing economy concept.
Content Analysis
Within the sharing economy, P2P business models consist of a triadic
structure whereby value creation takes place through decentralized
transactions and co-
creation, and review systems are applied. Value
26

capturing occurs through commissions, and emphasis is placed on flexi-
bility and safety for the consumer. Meanwhile, B2C business models
consist of a dyadic structure whereby value creation takes place in a
centralized resource pool. Value capturing occurs through commissions,
membership fees and public subsidies, and emphasis is placed on flexi-
bility and safety for the consumer. Finally, B2B business models consist
of a polyadic structure whereby co-creation is the basis for value creation.
Value capturing occurs through membership fees and commissions, and
emphasis is placed on flexibility through coopetition.
To a large extent, prior research has studied the phenomenon of the
sharing economy without separating P2P, B2C and B2B. The content ana-
lysis revealed that there are some quite unclear boundaries in the litera-
ture and that the terms have been used interchangeably. Based on the
approach that has been used for the content analysis, we chose to divide
the chapter into the sub-groups P2P, B2C and B2B, whereby the identified
business model elements “value creation”, “value capture” and “value
propositions” are presented within. Structural differences were observed,
which, in turn, influence the way companies create value, capture value
and create added value for consumers. In addition, we chose to include
other useful literature that has been identified, which can help influence
the research question of this study.
The P2P Sharing Economy Business Model

The identification of underutilized assets is the basis for value creation
within the sharing economy and occurs through “P2P intermediation”,
with a focus on decentralized P2P transactions (e.g., Airbnb) (Acquier
et al., 2019, p. 9). P2P business models are described as a triadic rela-
tionship in the literature, consisting of providers, intermediaries and con-
sumers, whereby value creation control is decentralized (Ritter & Schanz,
2019). This triadic business model, applied by companies like Airbnb and
Uber, is also referred to as a multisided platform (Piscicelli et al., 2018),
and the consumer can be either a business or an individual (Kumar et al.,
2018, p. 147). The business model that is applied by Airbnb and Uber,
for example, is characterized as a “matchmaker” as it is an economic
value creator focusing on decentralized for-profit transactions, whereas
“mission-driven platforms” that promote a social cause are seen as an
extended value creator (Acquier et al., 2019, pp. 13–15).
Underutilized assets form the foundation for value creation (Acquier
et al., 2019; Münoz & Cohen, 2017), but P2P services can be extended and
“serve as an attractive and profitable option for households and private
individuals” (Apte & Davis, 2019, p. 106). Value creation in P2P services
has moved beyond Porter’s value chain and now requires co-creation with
several entities, simultaneously (Apte & Davis, 2019, p. 110). Initially,
Apte and Davis (2019) developed a business model that is based on that
of Osterwalder and Pigneur (2010), whereby value creation reflects the
36
company’s ability to link customers and the easy-to-use platform. As ser-
vice platforms like Airbnb and Uber do not offer any products or services
of their own, they are generating value through “collecting, aggregating,
and presenting information to potential customers and service providers”
(Apte & Davis, 2019, p. 119; Cohen & Kietzmann, 2014).
Value capturing within the P2P sharing economy is based on the
two extremes: economic value creation and for-profit initiatives on the
one hand, and extended value creation and non-profit or limited-profit
initiatives on the other hand (Acquier et al., 2019, p. 10). “Mission-driven
platforms” focusing on extended value creation are based on either non-
profit or limited-profit models, by which voluntary contributions are cru-
cial for staying operational (Acquier et al., 2019, p. 14; Šiuškaitė et al.,
2019, p. 375). Value capturing may also occur through advertisements or
commissions that are compatible with their mission (Acquier et al., 2019,
p. 12). On the other hand, “matchmakers” focus on economic value cre-
ation through for-profit platforms that capture value through commissions
generated from market transactions between peers (Acquier et al., 2019,
p. 12), “aiming to maximize their revenue stream” (Šiuškaitė et al., 2019,
p. 375). Täuscher and Laudien’s (2018, pp. 321–323) analysis on key rev-
enue streams indicates that commissions are the most preferred option for
marketplaces within the P2P sharing economy, comprising 79%.
Value proposition is included as one of the nine business model
building blocks developed by Apte and Davis (2019, p. 117), who
point out the importance of “being able to quickly link customers with
suitable suppliers to cover customer needs”. Other significant elem-
ents related to value proposition include response speed and variety of
offerings, e.g., locations and standards related to properties or skill levels
related to labour (Apte & Davis, 2019, p. 117). In the case of the P2P
mobility firm GoMore, the value propositions are based on “the inten-
tion to offer financial compensation for car ownership and travel costs
to peer providers” (Guyader & Piscicelli, 2019, p. 1066). Sharing and
redeploying their resources and capabilities across the different business
models made them more competitive in terms of quality, growth and
profits, but more participants were gained through their initial P2P
business model (Guyader & Piscicelli, 2019). The increased focus on cost
savings and efficiency in the case of GoMore is supported by Täuscher
and Laudien (2018, p. 323), who found that 75% of their sample firms
provide additional value by increasing cost savings or efficiency.
The B2C Sharing Economy Business Model

To a large extent, the B2C sharing economy business model has been
concentrated to the field of carsharing (Acquier et al., 2019; Cohen &
Kietzmann, 2014; Münzel et al., 2019; Vaskelainen & Münzel, 2018).
In contrast to P2P and the triadic approach, value creation in terms of
B2C is described as a relationship between provider and consumer and is
46

referred to as a dyadic relationship (Ritter & Schanz, 2019). This dyadic
business model has a governance structure that is characterized by cen-
tralization, in which the primary focus is to possess unique and hard-
to-imitate resources (Ritter & Schanz, 2019, p. 324). The centralized
governance structure is reflected in the B2C value creation mechanism of
Acquier et al. (2019, p. 9), whereby car rental companies (e.g., Zipcar)
and databases for stored contributions (e.g., Wikipedia) are thought to
create value through “centralized resource pooling”. Within carsharing,
station-based and free-floating models have been identified as two alter-
native business models that differ in terms of their asset availability
to consumers (Vaskelainen & Münzel, 2018, p. 275). Station- based
business models use the same location for pick-up and delivery, whereas
the free-floating model gives the consumer more flexibility in terms of
pick-up and delivery and primarily operates in large cities (Vaskelainen
& Münzel, 2018, p. 275). These carsharing business models, oper-
ating with monetized access to a centralized resource pool, are further
described in the literature as “shared infrastructure providers” and
are characterized as economic value creators. However, databases like
Wikipedia are said to operate as a “commoners” business model that
is characterized as an extended value creator in which primary access is
free; therefore, it is a non-profit or limited-profit model (Acquier et al.,
2019, pp. 10–13).
The “commoners” business model is based on non-profit or limited-
profit intentions and strives to capture value by combining different
indirect approaches and keeping costs at a low level by receiving volun-
tary work (Acquier et al., 2019, pp. 11–13). These indirect approaches
can take the form of support from third parties, such as public authorities
and private donors, to receive financial or physical resources (Acquier
et al., 2019, p. 13). Another approach consists of running a “complemen-
tary for-profit activity to financially support the main mission” (Acquier
et al., 2019, p. 13) such as introducing an online shop or imposing a
monthly fee. Another configuration, “shared infrastructure providers”, is
categorized as a for-profit initiative whereby consumers can use the ser-
vice for a fee, either as paying members or on a pay-per-use basis (Acquier
et al., 2019, p. 10).
In terms of value propositions, the station-based business model is
based on market and community logic, whereas the free-floating model
is based on corporation logic (Vaskelainen & Münzel, 2018, p. 287).
The free- floating business model is a flexible solution for consumers
as they can, to a larger extent, pick up and deliver the car at different
locations in contrast to the station-based business model. Station-based
and free-floating business models contribute to the reduction of emissions
and congestion as people, especially Generation Y, prefer renting a car
when they need it rather than having their own car (Cohen & Kietzmann,
2014; Ferrell et al., 2017). The value proposition of the case firm GoMore
is based on offering car subscriptions to consumers for them to replace
56
car ownership, and it is financed through P2P car rentals (Guyader &
Piscicelli, 2019, p. 1064).
The B2B Sharing Economy Business Model

The sharing economy within the B2B sector operates with the aim of
optimizing the use of resources and thereby creating value for society
(Grondys, 2019, p. 1). Implementing the sharing economy concept in the
B2B sector facilitates (1) reduced production costs, (2) flexible response to
customer needs and expectations, (3) faster rebranding through effective
liquidation of assets, (4) more flexibility in fulfilling more complex orders
cheaper than before and (5) inclusion of both suppliers and customers
in the production process, sales and distribution (Grondys, 2019, p. 4).
Facilitating the interaction between these actors will enable value co-
creation among all stakeholders within the business’ network (Laczko
et al., 2019, p. 214). To be able to co-create value, Laczko et al. (2019,
p. 216) point out the importance of providing a significant number of
users and being attractive for new people to join in, which, in turn, leads
to increased platform stickiness. On the other hand, it is imperative that
the central actor is able to capture value from its stakeholders, described
as stakeholder profitability by Laczko et al. (2019).
Capturing the value a company creates is crucial to its survival, and the
literature has concentrated on the synergies between value creation and
appropriation from the central actor’s perspective (Laczko et al., 2019).
The simultaneous occurrence of value creation and value capture has
been put forward by Apte and Davis (2019) for the P2P sector and has
been extended to the B2B sector by Laczko et al. (2019). Contributing
to the literature of the B2B sharing economy, the missing link between
this simultaneous occurrence has been established by promoting eight
value-driving mechanisms for the central actor to create value for its
stakeholders, simultaneously increasing its own value capture opportun-
ities (Laczko et al., 2019, p. 227). Collecting and analysing data in terms
of value capture is highlighted as one of these mechanisms as “this infor-
mation can be used to create value by discovering stakeholder needs”
(Laczko et al., 2019, p. 225). Furthermore, in terms of value capture, ana-
lysis reveals that the use of membership fees (66%) is a more frequently
applied revenue stream within B2B marketplaces than commissions
(33%) (Täuscher & Laudien, 2018, p. 323). Resource sharing within the
B2B sharing economy has created the coopetition market model, leading
to reduced costs as a result of cooperation between competitors with the
aim of operating for the benefit of consumers (Grondys, 2019, p. 3).
Discussion
Based on analyses of the findings and the ensuing discussion, there
are some clear patterns. For the purpose of a better overview, we have
6

separated P2P, B2C and B2B, respectively, and each of the business model
elements. There are several obvious similarities between them, but there
are also some distinguishing characteristics that make them different in
several ways. We have compiled these findings into a framework presented
in Table 3.1.
Within the value creation dimension, two distinct structures have been
identified for P2P and B2C, respectively. The triadic structure, whereby
the interaction between two (or more) distinct types of users is facilitated
by intermediaries, is strongly associated with P2P platforms, while the
dyadic structure, whereby the interaction between owner and user occurs
without the use of intermediaries, is associated with B2C platforms.
Within triadic structures, value creation takes place at a decentralized
level, while within dyadic structures, it occurs through a centralized
resource pool. The ownership of resources is a part of the basis to separate
the approaches: in P2P platforms, companies typically do not own any
resources, while in B2C platforms, the companies own these resources.
The literature does not relate B2B platforms to any specific type of struc-
ture; however, we argue that B2B platforms can take the form of triadic
or dyadic structures, depending on the platform’s purpose and thus own-
ership of the resources. We characterized this as a polyadic approach in
this ecosystem. Nevertheless, value co-creation within the P2P and B2B
platforms has been put forward as a crucial activity and takes the form
of review systems in P2P. There are several similarities within the value
capture mechanism. The use of commissions is put forward as a source of
value capture for P2P, B2C and B2B. For P2P platforms, commissions are
the only mentioned source for value capturing, while they are the primary
revenue stream for B2C platforms. However, it is also recognized that
membership fees and public subsidies are other sources of value capture
for B2C platforms. In terms of B2B platforms, membership fees are the
most preferred revenue stream, but commissions are also frequently used.
In terms of value propositions, flexibility in relation to their consumers is
put forward within P2P and B2C, which can be achieved through oper-
ating different business models, leading to cost savings and efficiency.
For the B2B platforms, flexibility for both the consumers and the com-
pany itself is achieved through the network of suppliers, referred to as
the coopetition model. Technological developments that facilitate better
coordination and safety in terms of fraud and theft will, in turn, make
the users feel more comfortable and hence serve as an important value
extender.
Conclusion
This study addressed sharing economy business model variations based
on an exhaustive structured literature search and subsequent bibliometric
analysis that identified 19 core articles to synthesize the current state in
the sharing economy related to the P2P, B2C and B2B business models.
76
newgenrtpdf
Table 3.1 Compilation of findings according to the business model dimensions of P2P, B2C and B2B
P2P B2C B2B
Value creation • Triadic structure (Ritter & • Dyadic structure (Ritter & • Co-creation (Laczko et al., 2019;
Schanz, 2019) Schanz, 2019) Grondys, 2019)
• Decentralized transactions (Acquier • Centralized resource pool (Ritter
et al., 2019) & Schanz, 2019; Acquier et al.,
• Co-creation (Apte & Davis, 2019) 2019; Vaskelainen & Münzel,
• Review system (Täuscher & 2018)
Laudien, 2018)
Value capture • Commissions (Acquier et al., 2019; • Commissions, membership fees • Membership fees and
Täuscher & Laudien, 2018; Guyader and public subsidies (Acquier et al., commissions (Täuscher &
& Piscicelli, 2019) 2019; Täuscher & Laudien, 2018; Laudien, 2018)
Guyader & Piscicelli; Vaskelainen
& Münzel, 2018)
Value propositions • Flexibility (Apte & Davis, 2019) • Flexibility (Vaskelainen & Münzel, • Flexibility, “Coopetition”
and safety 2018) and safety (Grondys, 2019)
Examples Airbnb, Uber, GoMore Zipcar, Wikipedia WeWork, HeadBox
Distinguishing Consists of a triadic structure, Consists of a dyadic structure, Consists of a polyadic structure,
characteristics whereby value creation takes place whereby value creation takes place whereby co-creation is the
through decentralized transactions, in a centralized resource pool. basis for value creation.
and co-creation, whereby review Value capturing occurs through Value capturing occurs
systems are applied. Value capturing commissions, membership fees and through membership fees and
occurs through commissions, and public subsidies, and emphasis is commissions, and emphasis is
emphasis is placed on flexibility and placed on flexibility and safety for placed on flexibility through
safety for the consumer. the consumer. coopetition.
86

To answer the research question of this study, we mapped the similar-
ities and differences in the P2P, B2C and B2B sharing economy business
models for the following established business model dimensions: “value
creation”, “value capture” and “value propositions”. Our study revealed
that the business model structures are varied when it comes to value cap-
turing and that technological developments and value networks are the
basis of the value propositions. The framework distinguishes important
characteristics between P2P, B2C and B2B for each of the business model
dimensions. The implication of this study for managers and public policy
makers is the extension of awareness of a new set of business models,
whereby the emphasis is shifted towards resource exchange driven by
digitalization. This shift puts pressure on business leaders to transform
their existing business models so that the company can perform com-
petitively. The proposed framework provides an ability to distinguish
between underpinning structures as well as value creation and value-
capturing activities for each of the P2P, B2C and B2B business model
types identified within the extant sharing economy literature. Moreover,
this study confirms most research related to P2P sharing economy business
models. Consequently, further empirical research is necessary, especially
that addressing B2B sharing economy business models and the contingen-
cies experienced within different industries and business sectors to better
inform sharing economy business model variation.
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27
4
The Sharing Economy
as an Entrepreneurial Evolution
of Electronic Commerce
Andrea Geissinger, Christofer Laurell,
Christina Öberg, and Christian Sandström,
Introduction
Entrepreneurship could be defined as the process of creating business
and scaling its operations (Shane & Venkataraman, 2000). New types
of operations driven by digitalisation, such as the sharing economy,
challenge existing definitions of entrepreneurship both in the type of
value created and in the scaling efforts. There are thereby both social and
technological components, which, when taken together, construct a link
to different forms of commerce: e-commerce (electronic commerce), social
commerce and sharing commerce. E-commerce refers to ‘the seamless
application of information and communication technology from its point
of origin to its endpoint along the entire value chain of business processes
conducted electronically’ (Wigand, 1997, p.5). Social commerce denotes
‘the delivery of e- commerce activities and transactions via the social
media environment, mostly in social networks and by using Web 2.0 soft-
ware’ (Liang & Turban, 2011, p.6), while sharing commerce refers to
ways in which consumers share excess resources and benefits with other
consumers through easy-to-use cloud-based technology platforms such
as Airbnb (Hajli & Featherman, 2018). Social commerce, in contrast to
e-commerce, manifests as combinations of commercial and social activ-
ities, often with quite indirect commercial activities, such as individuals’
recommendations to others on social platforms (Liang et al., 2011), while
the sharing commerce puts focus on the more commercial interaction,
broadening the aspect of exchange and increasingly associating with
consumer-to-consumer activities.
Using these various types of commerce, the purpose of the chapter is
to assess the impact of the sharing economy on how entrepreneurship
has evolved. While e-commerce, social commerce and sharing commerce
could be regarded as distinct development steps linked to new and increas-
ingly democratised and interactive digital solutions, there are overlapping
understandings of the various forms of commerce. They would, thereby,
help to grasp entrepreneurship in new ways. The following research
question is addressed: How does the conceptualisation of entrepreneurship
37
Entrepreneurial Evolution of Electronic Commerce 73

need to be updated based on the evolution of commerce? In the chapter,
we link various types of commerce to different industry sectors to see
whether and how they indicate variances in the definition of entrepre-
neurship based on sector characteristics or if the need for a revised defin-
ition of entrepreneurship is universal in that regard.
The chapter contributes to previous literature by providing a system-
atic empirical account of the evolvement of the sharing economy vis-à-vis
electronic, social and sharing commerce and by conceptually explaining
why the sharing economy gives rise to a relatively wide plethora of
entrepreneurship initiatives. The literature on the sharing economy has
explored such issues as consumers’ motives (Hamari et al., 2016), the
impact of the sharing economy on specific industry sectors (Zervas et al.,
2017) and characterising features of sharing economy business models
(Cohen & Kietzmann, 2014). Much, though, remains in assessing the
sharing economy’s impact on the transformation of entrepreneurship. The
chapter illustrates the diversity of the sharing economy while pointing to
how e-commerce, social commerce and sharing commerce help to grasp
diversities that run across the sharing economy and the various sectors in
which it is presently represented. This again helps to question established
definitions of entrepreneurship (Shane & Venkataraman, 2000) and
introduce dimensions that a future revised definition needs to consider.
The remainder of the chapter is organised as follows. Next, we address
the character of the sharing economy and thereafter review current lit-
erature on e-commerce, social commerce and sharing commerce. The
following section describes the employed method, and subsequently,
findings are presented, analysed and discussed. Finally, some concluding
remarks are provided.
Sharing Economy as Commerce
The Evolution of the Sharing Economy

The sharing economy has developed in response to the lessening social
stigma associated with sharing rather than owning assets. According to
Belk (2017), the dominant social norms favouring ownership have partly
changed to being free of possessions and ‘renting’ what is needed, when
it is needed. Customers become more open to sharing their resources
(and often personal) possessions with others, such as their house or car,
enabled also as sharing platforms create the trust in strangers (Javenpaa
& Teigland, 2017; Möhlmann & Geissinger, 2018). Botsman and Rogers
(2010) highlight three broad characteristics of the sharing economy,
encompassing access to products or services without owning those
assets, the re-allocation of goods and the exchange of intangible assets.
Essentially, the three characteristics facilitate the ‘renting’ or sharing of a
product or service (e.g., Uber), redistribution of markets (e.g., Craigslist)
and collaborative lifestyles (e.g., Airbnb).
47
74 Andrea Geissinger et al.

There are several alternative terms for the sharing economy, including
the collaborative consumption economy (e.g., Hamari et al., 2016;
Möhlmann, 2015), on-demand economy (The Economist, 2015), peer
economy (or peer-to-peer economy; e.g., Weber 2016), and gig economy
(e.g., Greenwood et al. 2017). Combined, these terms point at (1) digital
peer-to-peer (i.e., consumer-to-consumer) and/or business-to-consumer
transactions (Acquier et al., 2017); (2) underused assets shared for free
or for a fee (Botsman, 2015); (3) intermediated, decentralised exchanges
(Acquier Daudigeos & Pinkse, 2017); and (4) temporality of access
(Botsman & Rogers, 2010; Frenken & Schor, 2017). These specifying
characteristics represent some opposing ideas, including what parties
take part (consumers and/ or businesses), the monetary/ non- monetary
arrangement, intermediaries that are disintermediated and decentralised
(Edelman & Geradin, 2015), and once looking into the verbs of the
sharing economy (cf. Belk, 2014): whether goods or services are trans-
ferred, rented, swapped or shared (e.g., Laurell & Sandström, 2017).
Even though research devoted to the sharing economy has gained con-
siderable traction, how the sharing economy impacts the development of
entrepreneurship is an issue where more knowledge is needed. This is not
the least so since the sharing economy carries characteristics that may be
interpreted as commercial, but also those being entirely non-commercial
as well as with a very limited social scope and hence links while also dis-
associating from electronic commerce and social commerce. It is also so
based on how the sharing economy expands into new sectors, affecting
how business is conducted in them. In the next section, we continue by
addressing various developments of commerce as a means to understand
evolutionary steps guiding towards a revised definition of entrepreneur-
ship, including both social and technological components.
E-commerce, Social Commerce and Sharing Commerce

E-
commerce thus refers to how exchanges occur through online
marketplaces. As such, e-commerce takes the vendor’s perspective on
marketing offerings to customers (Wigand, 1997) and highlights the use
of digital technology as shopping windows and shops. Meanwhile, social
commerce denotes how transactions and other activities occur with social
media as a facilitating tool (Liang & Turban, 2011). Zhang, Zhou and
Zimmermann (2013) define and situate social commerce in a framework
of business, technology, information and people in which the following
components are central: commerce activities including marketing, selling
or sharing; social media; people as community members, buyers and
sellers; and information about products and services. Social commerce
considers how social media helps a company understand its customers,
spread information about products and services, and do so with the
help of consumers’ social networks. Compared to e-commerce, it adds
consumers’ social media communication to the ability to communicate
57

products and services and links heavily to the general social media adapta-
tion in society. The transaction –the commerce –and its communication
are thereby divided between the supplier firm selling and the consumer
communicating (cf. Yadav et al., 2013). Here there are researchers turning
these activities around: pointing at the consumer selling service (Stephen
& Toubia, 2010) or the supplier firm using social platforms to commu-
nicate. The social network of parties is central and expects to positively
affect commerce, and the division of tasks and the social component are
different to how e-commerce places selling and communicating tasks at
the supplier while suppressing any social component.
Sharing commerce, which reflects how individuals utilise each other’s
resources on an accessing basis (cf. Acquier et al., 2017), may well connect
individuals that have no previous social history. In fact, connecting uncon-
nected parties is one of the characteristics of it, underpinned by transac-
tional exchanges and platforms as coordinators. Given a fuzziness of the
borders between social commerce and e-commerce (Huang & Benyoucef,
2013), the emerging sharing commerce is not easily separated from these.
If the consumer is the party to sell the product or service, social commerce
would run across both e-commerce and sharing commerce, as would be
the case if the company is the one to operate social media platforms and
use these as sales channels. The spectrum from e-commerce to social
commerce becomes a means to understand the for-payment/non-payment
orientation of exchanges in the sharing economy as well as the trans-
actional/social way of interacting. Table 4.1 presents definitions of e-
commerce, social commerce and sharing commerce and illustrates how
their respective characterising traits differ.
The sharing economy is currently exhibiting a highly diverse and
pluralistic character (cf. Mair & Reischauer, 2017) as it has come to
include several interrelated economies idealised in the cores of the access
economy, platform economy and community-based economy (Acquier
et al., 2017). It has also been described in terms of varieties in motives
(Hamari et al., 2016), for-payment/not-for-payment arrangements
(Laurell & Sandström, 2017), social/ transactional characteristics of
exchanges and the accessing/transferring as means of exchanges. It is
pluralised in how the peer-to-peer exchanges have become complemented
by company-to-company, consumer-to-company and company-to-
consumer exchanges, together with practicing forms of professional-
isation and more temporal, amateur-based transactions (Öberg, 2018).
The diverse and pluralistic character of the sharing economy, there-
fore, is likely to fuel various expressions of commerce: not only sharing
commerce but also social commerce and e-commerce. In light of how the
electronic and social commerce as well as the sharing economy literature
have gained traction, a clear gap in the existing literature concerns the
impact of the sharing economy on the evolvement of entrepreneurship,
and how our view on and definition of entrepreneurship changes due to
these developments.
67
Table 4.1 Definitions and characterising traits of e-commerce, social commerce

and sharing commerce
Concept E-commerce Social commerce Sharing commerce
Definition The seamless application The delivery of The ways in which

of information and e-commerce activities consumers share
communication and transactions excess resources
technology from its via the social media and benefits with
point of origin to environment, mostly other consumers
its endpoint along in social networks through easy-to-
the entire value and by using Web use cloud-based
chain of business 2.0 software (Liang social commerce
processes conducted & Turban, 2011, technology
electronically p. 6) platforms such as
(Wigand, 1997, p. 5) Airbnb (cf. Hajli &
Featherman, 2018)
Parties in focus The selling company The consumer’s social The platform
network
Role of central Sell Communicate Share/access
party
Motives of Financial (revenues) Social/hedonic Hedonic to financial
central party
Business/ Companies in focus Consumers in focus Consumer to consumer
consumer exchanges
Central devices Company website Facebook, Twitter, Web-based platform
blogs
Role of web Channel of sales Network of Coordination
trust Pre-purchase trust in individuals mechanism between
selling company Trust created based on user and provider in
the social network the platform.
(knowing the party Evaluations of peers
recommending in to reduce perceived
beforehand) risk
Research Design
To address the purpose of this chapter, social media analytics and con-
tent analysis of sharing economy platform websites were conducted.
The former was used to track and identify sharing economy platforms,
the latter to decide how these platforms related to electronic, social or
sharing commerce.
Data Collection
Collecting data from social media was considered suitable based on how
social media and the sharing economy has many overlaps in terms of
users (Dahlin & Öberg, 2017), the digital solution underpinning both
(Felländer et al. 2015) and since social media allows for the analysis of
up-to-date communication about recent developments. Data collection in
social media has become popular in recent years, resulting in the emer-
gence of social media analytics (Jung et al., 2017; Stieglitz et al. 2014),
7

which allows for systematic data capturing and analysis of a broad array
of social media posts.
As a means to deal with the deficiencies of social media in terms of
a fragmented social media landscape and the lack of standardised ways
to gain access to content across social media platforms, a data analytics
tool named Notified was used to track user-generated posts published
on dominating social media platforms (see, e.g., Geissinger et al., 2020;
Geissinger et al., 2019). To use the tool, the researcher first enters a key-
word or a set of keywords. After the keyword or the set of keywords are
entered, all publicly accessible posts on Twitter, Instagram, Facebook,
blogs, forums, and YouTube are collected in real time. A primary benefit
of using services like Notified is to gain access to data from all major
social media platforms directly. Another benefit relates to the possibility
of collecting data with the help of specific filters, which, for instance,
enable the researcher to focus on specific geographical areas of interest.
Filtering data collection to a specific language and user origin allowed for
a more focused approach. This is important because certain keywords
can have several connotations in different languages as well as be rare or
common in the everyday vocabulary across languages.
During the last two decades, Sweden has demonstrated high levels
of internet penetration and the use of digital technology among its ten
million inhabitants. Airbnb and Uber early became dominant platforms,
while new platforms emerged, making the Swedish sharing economy
particularly vibrant (Felländer et al., 2015). In this chapter, a data set
from social media was collected covering all public posts published on
the dominant social media outlets available that included the keyword
‘delningsekonomi(n)’ (the direct translation of ‘(the) sharing economy’
in Swedish) between April 1, 2016 and March 31, 2018. The usage of
‘delningsekonomi(n)’ in the Swedish language is strongly limited out-
side of the scope of its meaning as the sharing economy. Therefore,
user-
generated posts including this keyword were assumed to have
high relevance for the phenomenon under study. The social media data
collection generated a data set amounting to 8,755 social media posts.
Table 4.2 presents the distribution of collected posts per social media
platform.
Table 4.2 Collected published user-generated posts per social media platform
Social media n %
Blog 610 7.0

Facebook 893 10.2
Forum 32 0.4
Instagram 1,122 12.8
Twitter 6,098 69.6
Total 8,755 100.0
87
Data Analysis
Following the data collection, qualitative content analysis (Silverman,
2006) was applied by analysing each user-generated post published during
the first of the two years. This material was coded according to whether
individual user-generated posts included references to any sharing economy
platform, and in such instances, to which platform (or platforms) was
referred. This resulted in 1,872 identified posts (the remaining posts did
not mention any named platform(s)) referring to 66 unique platforms that
constructed the baseline for the study. This baseline was thereafter used
for the second year to analyse posts and platforms mentioned that year.
To decide the commerce orientation, the communication on the iden-
tified platforms’ websites was analysed for statements specifying whether
it referred to what could be interpreted as e-commerce, social or sharing
commerce. The definitions and descriptions in Table 4.1 were applied in
this step and guided the analysis. A clear indication for sharing commerce
(Hajli & Featherman, 2018) was assumed when website statements
encouraged consumers to share their possessions with other consumers
through their platforms. In cases where no such or related attributes were
presented, but the platforms’ websites stated social platform interaction
(Liang & Turban, 2011), these platforms were coded as social commerce
oriented. Clear indications of social commerce were statements encour-
aging consumers to engage with each other or with the platform provider
even though no sharing related encouragements were present. In cases
where neither sharing commerce nor social commerce-related aspects
were to be found, and descriptions included the sheer transfer of products
or services with companies potentially involved (cf. Wigand, 1997), these
platforms were coded as e-commerce oriented.
As a means to explore a possible connection between the type of
commerce and the industry sector in which the platform operated, the
next step of analysis focused on mapping sectors in which the identi-
fied sharing economy platforms operate. This step included the iterative
definitions of industry sectors from the data material to capture poten-
tial intra-sector variances in sharing social and general e- commerce
orientations and helped us to cross-check and validate consistency of
data. This part of the analysis also included finding explanations to the
various orientations anchored towards the industry sectors and using a
backward tracing of such explanations from the outcome of the ana-
lysis (cf. Jessop, 2005). The platform and sector analyses were followed
by quantitative content analysis (Silverman, 2006). This was carried
out by analysing the frequency and share of sharing commerce, social
commerce and e-commerce sharing economy platforms as well as their
associated sectors throughout the total 24-month period. The analysis
thereby focused on the number of platforms in each sector and assessed
individual platform’s impact measured through the relative number of
posts, including each platform.
97
Findings
Table 4.3 presents identified sharing economy platforms in the sharing
commerce, social commerce and e- commerce categories and their
associated frequency of social media posts. As the table illustrates, a
total of 20 general e-commerce platforms were identified that together
generated 215 user-generated posts or 11.5% of the total posts. In terms
of social commerce, 15 platforms were identified that together generated
787 user-generated posts, equivalent to 42.0% of the total posts. A total
of 31 platforms were identified in the sharing commerce category that
Table 4.3 Identified platforms in sharing, social and e-

commerce and their
associated frequency of user-generated posts
Sharing commerce Social commerce E-commerce
Platform Frequency Platform Frequency Platform Frequency

Swopshop 300 Uber 512 Sunfleet 50
Airbnb 122 Hoodifood 82 Meetrd 43
Uberpop 83 Taskrunner 62 Bundling 24
Fritidsbanken 64 Yepstr 40 Palaver Place 18
Skjutsgruppen 39 Freelway 28 Bonsai 17
Hygglo 39 Citorent 19 Kollektiva 16
Buddler 34 Addcreators 13 Car2Go 6
Snappcar 31 Baghitch 10 Cirqs 6
Airdine 27 Klädoteket 8 Moveabout 5
RentAway 24 Selectcook 4 Drive Back 5
Cykelkök 19 Antlos 3 Cool Company 4
Rentl 18 CycleWithoutAGe 2 Elbnb 4
Lendify 11 Lånegarderob 2 Ramirent 3
Airpnp 9 Eyeoda 1 Cramo 3
Delbar 8 GetAround 1 Lynk & Co 3
Growgbg 8 DriveNow 3
Swingabazaar 4 Sporthyra 2
GoMore 3 Keypit 1
Sportotek 3 Cargospace24 1
RentATrend 3 GigRove 1
Retoy 3
Grannsaker 3
Homii 3
WayWay 2
Boodla 2
Homeexchange 2
Rentez-Vous 2
Youple 1
Gumbuddy 1
Hoffice 1
Shareit Blox 1
Car
Total 870 787 215
08
180
160
140
120
100
80
60
40
20
Jan
Jan
May
May
Mar
Mar
Oct
Oct
Nov
Nov
Jun
Jul
Jun
Jul
Apr
Apr
Aug
Aug
Dec
Dec
Sep
Feb
Sep
Feb
2016 2017 2018
E-commerce Social commerce Sharing commerce
Figure 4.1 Aggregated frequency of user-generated posts published referring to

sharing, social and e-commerce platforms between April 2016 and
March 2018.
generated 870 user-generated posts over the measured period, equivalent

to 46.5% of all posts.
Figure 4.1 presents the aggregated frequency of user-generated posts
referring to sharing, social and e-commerce platforms between April
2016 and March 2018. As illustrated in the figure, the aggregated
number of posts about all three categories of platforms decreased from
the first to the second year. During the first year, posts about sharing
commerce platforms and social commerce platforms dominated, while
the engagement for e-commerce platforms spiked in November 2016.
During the second year, posts about sharing commerce platforms as well
as social commerce platforms dominated, despite a lower level of interest
among social media users, and posts about e-commerce platforms almost
disappeared towards the end of the second year.
Table 4.4 presents the distribution of identified sectors and the
associated frequency of social media posts for sharing, social and e-
commerce. As illustrated in the table, e- commerce platforms were
distributed among nine sectors, social commerce platforms operated in
seven sectors and sharing commerce platforms were present in 11 sectors.
Figure 4.2 visualises the degree to which the identified sectors related
18

Table 4.4 Distribution of identified sectors and their associated user-
generated posts for sharing, social and e-commerce
Sharing commerce Social commerce E-commerce
Sector Frequency Sector Frequency Sector Frequency

Fashion 305 Mobility 515 Work 86
Mobility 159 Services 89 Mobility 72
Services 158 Food 86 Kids Children 30
Hospitality 124 Work 54 Finance 16
Leisure 77 Logistics 38 Energy 4
Food 27 Leisure 3 Construction 3
Finance 11 Fashion 2 Leisure 2
Housing 4 Services 1
Kids and 3 Logistics 1
Children
Work 1
Miscellaneous 1
Total 870 787 215
to sharing commerce, social commerce and e-commerce. As can be read

from the figure, the mobility sector dominated and included the sharing
commerce, social commerce and e-commerce platforms. While mobility
runs across all types of commerce, other sectors are more oriented to one
category: fashion and clothing, with various forms of clothes-swapping
platforms, would be expressions of sharing commerce. Leisure similarly
describes a sharing commerce. Yet, other sectors divide between two
categories, then often including sharing commerce and e-commerce, or
social and e-commerce, while less often expanding between social and
sharing commerce.
Analysis and Discussion

The findings point out that the sharing economy includes traces of
various types of commerce, which broadly would not fit into prevailing
definitions of entrepreneurship. More precisely, our assessment shows
that the sharing economy fuels sharing commerce, and by doing so,
enables consumers to share excess resources and benefits with other
consumers through easy-to-use platforms (Hajli & Featherman, 2018),
again expressing how the sharing economy adds to what we previously
know about entrepreneurship, and also emphasising that it is neither fully
about entrepreneurship going digital (as in e-commerce) or going social
(as in social commerce).
E-commerce can be regarded as quite incompatible with the early
notion of the sharing economy, due to that the sharing economy
developed in response to the lessening of social stigma associated with
sharing rather than owning an asset (Belk, 2014). Meanwhile, sharing
28

economy platforms such as Uber and Airbnb become more and more
professionalised, with companies as delivering parties (Dahlin & Öberg,
2017) and as more and more exchanges seem to be for-payment ones
(Laurell & Sandström, 2017). E- commerce as part of the sharing
economy can, in one sense, indicate the presence of sharing economy
platforms taking part in ‘share washing’, that is, the pro-social labelling
of for-profit monetary exchange (cf. Belk, 2017; Troncoso, 2014), or it
can be considered to have generated market opportunities for actors that
may have grounded their business in activities of sharing, while grasped
scaling opportunities, the latter in line with present definitions of entre-
preneurship (cf. Shane & Venkataraman, 2000). Social commerce, as
part of the sharing economy, would emphasise how any exchange or
sharing is only social and potentially not based on any actual uses, hence
stressing the social dimension at the expense of the business orientation,
and thereby indicating characteristics that are external to what trad-
itionally defines entrepreneurship. With the sharing economy in mind,
though, social commerce may need to be integrated in a revised definition
of entrepreneurship. Meanwhile, the sharing commerce takes away the
actual transfer of goods or services, and potentially also the social dimen-
sion, from exchanges. While entrepreneurship may not explicitly refer to
exchanges of goods and services, these ‘verbs of the sharing economy’
(cf. Belk, 2014) indeed add to what traditionally would be thought of as
entrepreneurship.
As Figure 4.2 illustrates, the distribution of categories occurs among
sectors, with many sectors representing at least two categories, often with
e-commerce as one of them. This implies that the sharing economy is not
a by-sector phenomenon –neither in terms of its presence as such, nor in
its e-commerce, social or sharing commerce orientation. This strengthens
the case about how the definition of entrepreneurship would need to be
revised. The phenomenon at hand is not one of a single sector and it
is not a one-type-of-commerce per sector phenomenon. Rather it runs
across sectors with platforms making their own interpretations of how to
make themselves part of the sharing economy or how they see themselves
affected by it. It also illustrates how platforms are developed to either
niche them towards other platforms in the sector or based on other fun-
damental motives –hedonic or financial (cf. Hamari et al., 2016) –than
those already in the sector.
When taken together, our assessment of the sharing economy related
to sharing, social and electronic commerce illustrates how the sharing
economy has multiple impacts on entrepreneurship. This is the case in light
of the three respective forms of commerce present in the sharing economy
and because the three types are present across industry sectors. As such,
the sharing economy’s overall impact can be understood to fuel the three
types of commerce, but also introduce potential turbulence within the
industry sectors where several forms of commerce co-exist. Given that the
sharing economy continues to expand and encompass additional industry
38
Figure 4.2 Data flow over the studied time period by sector and commerce.
sectors, increased turbulence in other sectors is a likely future scenario

where studies within the intersection between the sharing economy lit-
erature and the commerce literature arguably will become essential to
understand this interplay’s consequences for the evolving structure of the
sharing economy but also the future of entrepreneurship.
Concluding Remarks, Limitations and Future Research

This chapter assesses the impact of the sharing economy on how entre-
preneurship has evolved. The introduction raised the following question:
How does the conceptualisation of entrepreneurship need to be updated
based on the evolution of commerce? Based on a data set of social
media posts reporting on the sharing economy and our categorisation of
platforms into electronic, social and sharing commerce, the chapter indeed
points at how entrepreneurship as the process of creating business and
scaling its operations (Shane & Venkataraman 2000) does not manage
to capture everything that goes on in the sharing economy. Meanwhile,
pluralities and dynamics related to the sharing economy expanding from
e-commerce to sharing commerce within and among sectors would mean
that times may presently not allow for a redefinition that stands the test
of time.
48

With that said, entrepreneurship would need to include options for
social exchanges as expressed in social commerce, yet also non-social
ones. It would also need to include the digital component as an enabler
to growth –as expressed in e-commerce –or as an intermediator in the
sharing commerce. To think about entrepreneurship as something not
containing business growth but rather social growth, non- exchange
rather than business transactions, and expansion not being at the heart of
operations but rather decentralised, helps to challenge existing definitions.
This chapter contributes to previous literature by providing a system-
atic empirical account on the evolvement of the sharing economy vis-
à-vis entrepreneurship and by conceptually explaining why the sharing
economy gives rise to a relatively wide plethora of commerce initiatives,
along with the mutual impact between the forms of commerce and the
sharing economy. To studies on entrepreneurship specifically, the chapter
illustrates an expansion of approaches to operate, which is affected
not only by the technological development but also by trends of online
socialising and sharing as opposed to owning (cf. Belk, 2017). These latter
aspects indicate how changing social norms affect entrepreneurship, not
only in the construct of new operations and transformation of present
ones (as illustrated by the expansion of the sharing economy) but also in
the orientation of commerce (as sharing, social and electronic commerce)
sharply creating pluralism, yet also expectedly affecting operations
beyond the sharing economy. Methodologically, our chapter provides
illustrations of how current phenomena and developments may benefit
from current and developing research methods, not least when they link
data methods to researched phenomena as in social media analytics and
digitalised operations.
As for practical and policy implications, the chapter points at how the
sharing economy challenges entrepreneurship definitions, which in prac-
tice would mean questioning present interpretations and understandings
of entrepreneurship. As such, sharing expands the lens of commerce and
would mean for present business actors to extend their view on what
is business, competition and forms of collaborations. For policy, the
obvious link is between sharing and those regulatory regimes that guide
operations yet also support them. As has been discussed in previous lit-
erature: how, why and when should sharing be taxed? But also: when
would sharing operators be eligible for business support?
This study has two main limitations. First, the study is empirically
limited to publicly posted user-generated posts published in the social
media landscape and sharing economy platforms’ websites. Second, the
collected data set from social media solely contains user-generated posts
published in Swedish. As such, other national settings may differ sub-
stantially from the Swedish discourse. We welcome further research on
the topic and research elaborating on the sharing economy in various
countries in this regard. Longitudinal studies may help to indicate the
developing trends noted in the chapter.
58

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8
98
Part II
Digital Entrepreneurship and

Sharing Economy
Various Cases and Contexts
09
19
5
Asymmetries of Local Economic
Impacts of Digital Entrepreneurship
in Denmark
The Case of Airbnb
Jie Zhang and Nino Javakhishvili-Larsen
Introduction
This chapter investigates the potential economic impact of Airbnb on
regional economies. Airbnb is a peer-to-peer (P2P) accommodation rental
platform that allows individuals to rent out their dwellings to other indi-
viduals for a short period. This digital business form is often described as
shared economy activity, which has grown rapidly over the last decade.
The rise of Airbnb has been due to the increasing demand for short-term
rental accommodation and the popularity of online digital platforms. The
online platform, Airbnb.com, is a digital marketplace that matches hosts
and guests. The owners of houses or apartments (hereafter called ‘hosts’)
can efficiently offer their unused rooms for short-term rental through
the online platform, while other individuals (hereafter called ‘guests’)
can search for the available spare rooms for short-term use. The hosts
become entrepreneurs, earning extra income by renting out their spare
rooms. At the same time, the guests, who are often tourists, can book
accommodations at a lower price than other accommodation services
offered at the destination.
The aims of this chapter are (1) to contribute to the scarce literature
on digital entrepreneurship, such as Airbnb, (2) to measure the value of
Airbnb tourism in the local economy and (3) to shed light on how pol-
icies and regulations can be applied to diversify the economic gains from
the digital entrepreneurship, so that it becomes favourable for tourist
destinations not only in the urban areas but also in peripheral areas. The
studies of Airbnb in Norwegian rural and peripheral destinations have
shown that Airbnb has already spread into rural and peripheral regions,
although it is primarily an urban phenomenon (Strommen- Bakhtiar
&Vinogradov, 2019).
Most businesses at the tourist destinations benefit from an increased
number of visitors from Airbnb tourism such as restaurants, cafeterias
and other tourism operators (e.g. museums, tourist attractions). They
29
92 Jie Zhang and Nino Javakhishvili-Larsen

benefit from increased turnover when more tourists arrive at the destin-
ation (Fang et al., 2016; Tussyadiah & Pesonen, 2016; Leick et al., 2020).
However, hotel sector organisations express concerns about Airbnb’s
unfair competition for the prices of accommodation, and about hotels
losing their market shares in the accommodation market (Zervas et al.,
2017). The Airbnb company and Airbnb hosts are delighted to see the
growth of the Airbnb market (Airbnb, 2019). The digital rental platform
provides unique opportunities for individual entrepreneurs to get into
markets as providers rather than consumers.
We argue that the sharing economy, including Airbnb, is an innov-
ation, which creates new means of supply and expands economic
activity within other areas of service. If the increase of supply induces
extra demand on the market, we assume that this will lead to growth in
the local and regional economies. Furthermore, it is likely that Airbnb
business will affect the traditional hotel business and push it towards
innovative changes to keep its customer base.
Sharing economy activity through digital platforms reflects the fact
that citizens, especially urban citizens, have become digital entrepreneurs.
They have become aware of the concept of resource- saving, where
resources should be utilised more efficiently. It is cheaper for an indi-
vidual (both guest and host) when traditional employees are removed
from the distribution chain of an economic activity by digital platforms
(Richter et al., 2017; Kraus et al., 2018). Digital platforms function as
a ‘middleman’, connecting users and providers to trade their goods and
services. The shared economy is the new and unreversed business model,
changing from B2B (business to business) to B2C (business to consumer)
and further to C2C (consumer to consumer). The latter type is a new
business model derived from the popular online trading or through digital
platforms and is growing especially in the sharing economy. The idea of
a sharing economy is that consumers share the same resources without
switching ownership (Kraus et al., 2018; Richter et al., 2017; Sussan &
Acs, 2017; Zervas et al. 2017).
The main purpose of this chapter is to make regional economic ana-
lysis of Airbnb activities through a database we collected. Airbnb data
is collected from different sources, through which we also discuss the
geographic distribution of Airbnb listings, listing prices and the potential
for income generation in the local and regional economy. The data inves-
tigation provides a database for further analysis of the daily spending of
Airbnb tourists, and to estimate total tourism revenue by given numbers
of nights and the patterns of expenditure by Airbnb tourists. As a contri-
bution to filling the gap in the literature, this chapter aims to shed light on
the economic consequences of Airbnb tourism. The Danish interregional
economic model, SAM- K/LINE®_ RTSA is applied in the analysis to
evaluate the economic effects of Airbnb through tourist spending in cities
and coastal-peripheral regions.
39
Digital Entrepreneurship in Denmark 93
Theoretical Framework of Digital Entrepreneurship and the

Sharing Economy
Various studies of the sharing economy analyse the effects of the goods
and services that are consumed by multiple users. When so-called ‘under-
utilised’ products and services are returned to the supply chain, the value
created by using idle resources generates additional economic wealth.
Seen from the demand side, consumers benefit from the sharing economy
by renting goods and services at a lower price and with lower transac-
tion costs than buying or letting through a traditional provider (Zervas
et al., 2017). Richter et al. (2017, p.301) define the sharing economy as
“an economic model enabled and facilitated by the Internet and Web 2.0,
in which users systematically share underutilized assets for monetary or
nonmonetary benefits”.
The main driver for tourists to use the Airbnb digital platform is finan-
cial. A low-cost alternative to hotel accommodation is a primary motive
for tourists to choose Airbnb. Tourists have always searched for ‘better
value for the money’ (Balck & Crocau, 2015; Botsman & Rogers, 2011;
Guttentag, 2015; Lamberton & Rose, 2012). Another motive is to keep
social connections with the local communities (Tussyadiah & Pesonen,
2016). Most Airbnb listings are located outside the central hotel districts,
and thus they provide tourists with intimacy and unique experiences in
authentic settings (Guttentag, 2015; Oskam & Boswijk, 2016). Therefore,
on the one hand, lower cost and unique local experiences from Airbnb
are primary motives for tourists and, on the other hand, Airbnb tourists
are willing to spend more in other goods and services at the destination
(Tussyadiah & Pesonen 2016).
As Tussyadiah and Pesonen (2016) point out, digital entrepreneurship
through Airbnb transactions has shown a positive impact on local host
communities, especially income generation. The business model has also
induced more people to travel and change their travel patterns and behav-
iour. Tourists tend to travel more frequently due to the availability of
low-cost accommodation, and they are encouraged to participate more
actively in local activities. Moreover, Airbnb tourists tend to stay longer
and spend more than traditional tourists. There is a need for further inves-
tigation of the effects of Airbnb on local economies in order to motivate
well-informed policy making and local planning.
As a low-cost accommodation form, Airbnb is a competitor to the
traditional accommodation providers. Zervas et al. (2017) analysed the
effects of Airbnb supply on hotel revenue and found that Airbnb might
cause reduced demand for small vacation hotels; however, the effect of
Airbnb on the luxury hotels is limited. The authors claimed that Airbnb
was taking over the role of low-cost hotels like bed and breakfasts and
hostels, as it most likely substitutes these, but not luxury hotels, which
are more oriented towards business tourists, whose expenses will be
49

reimbursed by their companies. Neeser (2015) applied the same method
as Zervas et al. (2013) on the hotel revenue in Nordic European coun-
tries, and their results show that Airbnb did not significantly affect hotel
revenue, but it did influence hotel room prices. Moreover, some studies
also showed that short-term rentals through Airbnb had no effect on the
housing market or house prices. Parirolero (2016) established a method
to test the relationship between houses sold and Airbnb development and
provided evidence of insignificant correlation between Airbnb activity
and house prices.
Felländer et al. (2015) believe that a sharing economy can save
transaction costs (e.g. saving the intermediate costs replaced by digital
transactions). A sharing economy can also save bargaining and other costs
by online transactions. Fang et al. (2016) provide an analysis of Airbnb’s
effect on local employment. The results showed that Airbnb makes a posi-
tive contribution to tourism employment in the local economy, as tourists
increase the consumption of local products and services. However, one
of the drawbacks of the Airbnb business model seems to be that it might
substitute and crowd-out low-end hotel accommodation in future.
The increasing popularity of using digital marketplaces to conduct
business is motivated by saving transaction and intermediate consump-
tion costs. Traditional business models in service sectors are moving more
towards digital business ventures and interactions online. Digital entre-
preneurship is defined in many ways; however, all definitions empha-
sise the entrepreneurial aspect, i.e., sales, transactions, networking,
conducted through the online platforms. Sussan and Acs (2017, p.66)
define digital entrepreneurship as business activity “engaged in any sort
of venture be it commercial, social, government, or corporate that uses
digital technologies”. Sussan and Acs (2017) classify digital entrepreneur-
ship as three types of digital business model: the user-intensive unpaid
(e.g. Facebook, Instagram, where the users share free information), the
sharing economy (e.g. Airbnb, Uber, where the unused commodities are
shared with payment through online transactions) and the user-intensive,
both paid and unpaid (e.g. Spotify, dating sites, where some services are
unpaid with the possibility to upgrade to the paid services).
In the rapidly growing digital era, the sharing economy business
model grows through the reliability and trustworthiness of the business
transactions, and this depends on the customer review system and the P2P
model. The sharing economy through digital platforms diverts business
activities from traditional business models to digital entrepreneurship
and “challenges the traditional understanding of entrepreneurs” (Leick
et al. 2020, p.4).
Digital entrepreneurship relies on a good infrastructure of internet
providers, and therefore it is mainly an urban phenomenon, as there
is more high-speed internet and communication in cities than in rural
and peripheral areas. Geissinger et al. (2019) emphasised the changing
lifestyle/condition and urbanity as one of the main reasons for growing
59

digital entrepreneurship in the sharing economy. They studied the digit-
alisation of business activities through the history of digital start-ups and
concluded that cities play an important role in imposing institutional
change and in the growth of accessibility to information technologies and
internet infrastructure. They argue that the recent trends in the develop-
ment of digital entrepreneurship in the sharing economy point to future
disruption, in both technological and institutional terms, in certain indus-
tries, thus pushing the governing institutions to adjust and change the
regulatory approaches. One of the criticisms of digital entrepreneurship
in the sharing economy is the absence of institutions that govern and
regulate business activities, and this can lead to the failure of the model.
As Kraus et al. (2018, p. 14) write: “Without fixing the tax requirements
and the misuse of personal data, these models might not be sustainable,
even in times of extreme digital entrepreneurship”.
Denmark is one of the first countries in the world to enter into a
collaborative agreement with Airbnb in 2018; the Danish government
regulated that Airbnb hosts in Denmark can rent out their spare rooms
for up to 70 days per year, and as an incentive there is an income tax
allowance on the income generated through Airbnb rentals (Danmarks
Erhvervsministeriet, 2017; Statistics Denmark, 2018; Rasmussen, 2019).
In order to determine the best regulatory and institutional approaches,
there is a need to understand how Airbnb as a form of digital entre-
preneurship can contribute to local economies. Leick et al. (2020, p. 4)
argue that the digital entrepreneurship in the sharing economy business
model, like Airbnb, is ‘opportunity entrepreneurship’ (i.e. opportunity
for using unutilised resources and expect expanding market demand),
rather than ‘necessity entrepreneurship’ (i.e. new business start-ups due
to the lack of income opportunities). They follow Urbano and Aparicio’s
(2016) argument that entrepreneurship growth leads to local economic
growth and they test this empirically by studying Airbnb’s role on local
economic development in Norway. Leick et al. (2020, p. 6) suggest a
theoretical framework by linking digital entrepreneurship in the sharing
economy to local economic growth. Their empirical model tests this link
by using local unemployment as an indicator of economic growth. Their
findings show that the increase in the unemployment rate does not affect
Airbnb activity. They argue that Airbnb is opportunity entrepreneurship
and therefore it does not show the traditional link of entrepreneurship
to the traditional economic growth indicators such as unemployment
(which is more common in necessity-driven entrepreneurship activities).
However, their study proves that Airbnb growth provides extra accom-
modation facilities and contributes to increasing the attractiveness of
tourist destinations, thus increasing the demand in the tourism sector
(Leick et al., 2020).
This chapter studies the Airbnb case empirically by following the
principles of digital entrepreneurship in the sharing economy (Kraus
et al., 2018; Richter et al., 2017; Sussan & Acs 2017). It accepts the
69

opportunity- driven entrepreneurship nature of Airbnb (Leich et al.,
2020) that has primarily been an urban phenomenon emerging within
disruptive institutional change (Geissinger et al., 2019). The chapter adds
to previous empirical research by studying Airbnb’s direct and derived
economic effects on the tourism sector, both in larger urban areas, as well
as in rural and peripheral regions in Denmark and it measures the overall
economic value of Airbnb.
Collection and Processing of Data

Data is a critical issue in the analysis of Airbnb. Online short-term rental
is a new economic activity, so there is no data available in Denmark before
2015. Airbnb, Inc. has limited information regarding detailed datasets for
research purposes. However, there are some Airbnb data sources avail-
able, and some variables can be collected there (Airbnb, 2015). The aim
of data collection is to estimate the number of Airbnb bed nights that
tourists spent at the destinations, tourists’ daily spending, room usage
and the other categories.
To estimate the number of Airbnb bed nights, we need information
such as percentage of usage of Airbnb listings, renting frequency, length
of stay and party size. Daily spending is collected by expenditure per
person per night in different consumption categories. Total expenses of a
tourist comprise daily spending and the rent paid to that hosts, excluding
the Airbnb fees.
Length of stay is an important indicator, as it concerns the business
strategy of the tourism destination and for the travel industry. Length
of stay represents the ‘quantity’ of vacation purchased by travellers, as it
has a direct implication on tourist spending and, consequently, income
generated at tourism destinations. Data shows that tourists stay at an
Airbnb accommodation longer than they stay at a hotel (Airbnb, 2015).
This indicates the rapid growth in the Airbnb business model in the
tourism economy and its potential impacts on both tourist behaviour and
additional demand at tourism destinations. The indicators for Airbnb
growth include the number of bed nights, length of stay, party size and
the activities participated in at destinations.
Airbnb Data Source

Airbnb data was collected via two main data sources: ‘Inside_Airbnb’
and Tom Slee’s Airbnb data. Furthermore, some data was collected
from Airbnb.com and Airdna.com. Some indicators were also obtained
through Airbnb Inc.’s annual report by city (e.g. Copenhagen).
In Denmark, the total number of estimated bed nights is broken down
into municipalities using the number of listings by different geograph-
ical regions. The data shows that most of the Airbnb listings started in
2015. In June 2016, the number of listings in Copenhagen was 16,178, of
79

which 82% were for entire apartments (houses/summer houses) and the
rest were room rentals. In 2017, the number of bed nights at an Airbnb
was obtained from the Airbnb Inc. through VisitDenmark, which is a
national tourism organisation that receives data directly from Airbnb Inc.
every year.
Variables in Airbnb Dataset

Variables in the dataset contain the ‘room_ID’, ‘host_ID’, ‘type of room’
(entire home/ apartment, private room and shared room), ‘location’,
‘neighbourhood’, ‘review’, ‘satisfaction’, ‘accommodation’, ‘number of
bedrooms’, ‘number of bathrooms’, ‘price’, ‘min_stay’ and ‘latitude and
longitude’.
Method of Data Transformation and Stylised Facts

The number of reviews of hosts by geography is used as a dummy vari-
able for the number of nights rented out at an Airbnb. The size of travel
parties and length of stay can also be found in the dataset. An alterna-
tive method is to estimate the average spending for an overnight stay.
Two formulas are applied in the estimation of total tourist spending at
an Airbnb, i.e. the number of bed nights at an Airbnb and the average
spending of tourists at an Airbnb:
1) N
umber of bed nights at an Airbnb = number of arrivals ×
average length of staty × size of travel party
2) T
otal tourist spending at Airbnb = number of bed nights ×
average spending per person per bed night
The average spending of Airbnb tourists in other daily consumption cat-

egories (such as food, clothes and transport) is assumed to be similar to
the spending of tourists who stay in small hotels. Such data is already
available from visitor surveys in Denmark and is used in this analysis.
During 2015 and 2016, there were on average 22 nights per active
host in the whole country. The average number of nights per host for the
capital city area (i.e. Copenhagen and Frederiksberg municipalities) was
much higher, about 30 nights per active host, compared to the average
number of nights in destinations outside of capital city area, which was
around 20. Therefore, the national average (22 nights per host) was
applied in the calculations, with the assumption that the hosts must have
received at least one booking for one year.
There was a significant difference between the number of gross listings
and the number of listings that have received at least one booking for one
year. A large proportion of the listings data comes from 2016 to 2017
Airbnb Inc. data source.
89

Table 5.1 Number of listings, prices, length of stay, party size and estimated bed
nights of Airbnb
Area Number Average Number Length Party Estimated

of listings listing of nights of stay size nights
price (apartment)
Copenhagen 17,714 680 529,412 4 2.2 1,164,706

Aarhus 2,004 495 40,080 4 2.2 88,176
Aalborg 505 443 10,100 4 2.2 22,220
Odense 524 442 10,480 4 2.2 23,056
Sum of four 20,747 590,072 1,298,158
urban
cities
Rest of other 4,201 636 107,969 5.2 2.9 260,608
urban
areas
Sum of rest 9,389 574 187,780 5.2 2.9 538,928
coastal
areas
Sum of 34,337 885,821 2,097,694
Denmark
We assume that the average number of bed nights outside of capital

city area is the same for the whole of Denmark. A higher number of
nights were observed in more popular destinations than in less popular
destinations.
From the website www.airbnb.com, we find an average listing price
per destination that should exclude 12% of the booking fee. Airbnb is a
digital platform and is not necessarily located in the same municipality
as where the bookings are made, and therefore the booking fee is not
included in the price of Airbnb accommodation in the destination muni-
cipality. By taking this into consideration, the average spending of Airbnb
tourists is re-calculated accordingly.
Table 5.1 shows the transformed dataset with the number of listings,
prices, length of stay, party size and the number of bed nights in 2016.
The total listings in Denmark were 34,337, from which bed nights are
estimated to be around two million. The four largest cities in Denmark,
Copenhagen, Aarhus, Odense and Aalborg, dominate the Airbnb market,
accounting for 60.4% of listings and 62% of Airbnb bed nights. The
listing price in the capital city area is the highest.
As shown in Table 5.2, in 2017 the total number of bed nights at Airbnb
was 3,171,000, of which 576,000 were domestic, and 2,595,000 were
foreign tourists. The four largest cities had about two million overnights,
accounting for 66.4% of the total, and the capital city area (Copenhagen
and Frederiksberg) accounted for 56.5% of the total bed nights.
Table 5.3 shows the total tourism revenue for Airbnb, which was DKK
5,969 million in 2017, with 68.3% of revenue concentrated in four main
9

Table 5.2 Number of overnight stays at Airbnb in 2017 by cities and regions (’000)
Area Domestic Foreign Total % of the total
Copenhagen 142 1,649 1,791 56.5

Aarhus 69 136 205 6.5
Odense 20 36 56 1.8
Aalborg 19 35 55 1.7
Sum of the four cities 251 1,856 2,106 66.4
Rest of the Capital Region of 147 333 480 15.1
Denmark
Region Zealand 39 89 128 4.0
Rest of the Region of Southern 67 153 220 6.9
Denmark
Rest of the Central Denmark 41 92 133 4.2
Region
Rest of the North Denmark 32 72 104 3.3
Region
Total Denmark 576 2,595 3,171 100.0
Table 5.3 Tourism revenue at Airbnb in 2017 by cities and regions (DKK mill.)
Area Domestic Foreign Total % of the total
Copenhagen 233 3,285 3,518 58.9

Aarhus 113 267 379 6.4
Odense 25 61 86 1.4
Aalborg 26 69 95 1.6
Sum from the four cities 397 3,682 4,079 68.3
Rest in the Capital City Region 240 653 893 15.0
Zealand Region 48 173 220 3.7
Rest in The Southern Denmark 85 264 349 5.9
Region
Rest in The Central Denmark 66 180 246 4.1
Region
Rest in The Northern Denmark 43 138 181 3.0
Region
Total Denmark 879 5,089 5,969 100.0
cities. The capital city area alone accounted for 58.9%. The data clearly
indicates that Airbnb is an urban phenomenon, and a large percentage of
Airbnb tourists are foreigners.
Methodology for Evaluating Airbnb Impacts on Regional

Economies
According to the data records, 5% of total households have rented out
their private homes to tourists in Denmark. This demonstrates how the
simplicity and easy accessibility of digital entrepreneurship motivate
01

any opportunity-driven person/household to be involved in the sharing
economy business model. The share of households involved in Airbnb
activities is higher in the cities (e.g. Copenhagen) than in the provinces.
This new way of staying overnight does not involve traditional business
elements such as a hotel or a food provider, but involves private indi-
viduals, or so-called opportunity-driven entrepreneurs, renting out their
spare rooms or apartments to guests. Renting income is thus registered as
private personal income, and not as business income, as is more common
for traditional accommodation businesses. Therefore, Airbnb-generated
income is not treated in the model as business income, but it is treated as
personal income. In order to analyse the economic impact of Airbnb, the
assumption in analyses was defined as follows: firstly, as individual per-
sons hosts do not pay corporate taxes, although they pay personal income
taxes. Secondly, they receive tax deductions for additional income from
Airbnb. This was initiated by the Danish government in order to motivate
people to register their Airbnb activities in the tax system. Thirdly, in the
modelling, income from Airbnb rentals is treated as a part of the house-
hold income, which is linked to the housing sector and redistributed in
the economy through private consumption of products and services.
The Danish interregional macroeconomic model, SAM- K/
LINE®
(called ‘LINE model’ in this chapter) is applied in this analysis. It is a
regionalised input–output type of model with social accounting matrices
(SAM) and the price-due circuit as its modelling framework. The model is
based on basic economic theories; for example, it has three main actors:
producers, households and the government. The producers produce
and deliver products and services to other producers (as intermediate
inputs), to the government and households (as final demand). In contrast,
households deliver labour force (as a production factor) to producers,
and the government provides public services to households. At the same
time, the government maintains welfare in the country through income
taxes, corporation taxes and product taxes, including value-added tax
(VAT) (Madsen & Zhang, 2010; Zhang, 2014).
As an interregional macroeconomic model, the LINE model
distinguishes geographical regions as ‘place of production’, ‘place of resi-
dence’ and ‘place of demand’. The framework with SAM contains pro-
duction sectors (J), factors (F), household types (H) and products and
services (V). At the same time, the model system has a flexible degree of
aggregation for sectors, factors (age, gender and education), household
types and products and services.
According to the characteristics of interregional macroeconomic
models, the LINE model also has several linkages and sub-models based
on Keynesian economic theoretical principles. For example, the labour
market sub-model can analyse labour supply and labour market demand
through commuting matrices based on very detailed register data for
the labour force. The tourism sub-model analyses consumers’ shopping
and tourist activities from the place of residence to the place of demand
1
0

(i.e. location of shops, restaurants, destinations). There is a trade sub-
model that describes how products and services are traded within and
between regions. A more detailed description of these linkages, including
interregional commuting, shopping, trade and tourism flows, can be found
in Madsen & Zhang (2010) and in Zhang (2014). These sub-models and
linkages make it possible to calculate regional economic effects by chan-
ging exogenous variables.
The tourism sub-model in the LINE model is constructed based on
the detailed tourist bed night data from Statistics Denmark and tourism
survey data from VisitDenmark (VisitDenmark, 2020). Tourism destin-
ation is assigned as the ‘place of demand’, and we treat domestic business
tourist consumption as the demand from producers at the ‘place of pro-
duction’ and tourism consumption by domestic leisure tourists as demand
from households from the ‘place of residence’. Tourism consumption by
foreign tourists (both business and leisure tourists) is treated as a Danish
export of tourism services; however, as tourism consumption occurs in
the place of demand, it is also a part of private consumption in the tourist
destination region.
In this analysis, we apply the demand approach (Keynesian), whereas
the starting point is the changes in the demand side. Based on Airbnb bed
nights and spending at the tourist destinations, the tourist demand by
different consumption products at each tourist destination is established.
The simulation exercise is based on the equilibrium in the model frame-
work, where regional supply equals to regional demand for all products
and services. In the model, investments and exports are treated as
exogenous, while private and intermediate consumption are endogen-
ously determined by the economy’s capacity. The model also assumes
that domestic markets of goods and factors are perfectly competitive.
Capital and labour are perfectly mobile between sectors and regions.
For this chapter, the experiment is established such that Airbnb
tourism is removed from tourist demand in the Danish economy and the
consequences are re-calculated and analysed. The model analysis is based
on a short-term solution, as in the long-term, technology evolution or
changes in productivity evens out the short-term demand change and reach
a new equilibrium. The model operates in several iterations, representing
the economic reaction to the changes in final demand. When assuming
there is no tourist demand for Airbnb overnight stays, the reduction is in
the existing built-in data system in the different tourist destinations. Some
regions experience decreasing demand for certain products and services
caused by removing Airbnb tourism from demand. Production, employ-
ment and income fall. The first round of production reduction causes the
intermediate demand to fall as well. At the same time, the income reduc-
tion reduces demand from the household. Therefore, both intermediate
demand and private consumption decrease, giving the second and third
rounds of reduction. The amount of reduction in all rounds represents the
total reduction in production, gross value added (GVA) and employment,
2
0
1

and this was implemented in ten iteration rounds. All the variables in the
model system are changed accordingly, both economic and governmental
(income and other taxes) revenues. As the LINE model is an interregional
economic model for Danish municipalities, this scenario experiment
allows the model to estimate the Airbnb tourism economic value in intra-
and inter-municipality economic linkages, both directly and derived.
Economic Effects from Airbnb Tourists: City Versus Peripheral

Regions
This section presents the results from the model experiment analysis for
Airbnb tourism. The most common variables for measuring economic
value are employment, income indicator –GVA and income taxes.
Table 5.4 shows Airbnb employment effects broken down into cities
and peripheral regions. The total employment effects are 5,662 full-time
equivalent jobs, of which 3,704 are direct employment effects and the rest
are jobs derived from economic and geographic linkages. The employ-
ment effects show mostly in the four largest cities; they account for
61.5% of the direct employment effects and 53.5% of the total employ-
ment effects. In capital city area, Airbnb generates 2,449 jobs, accounting
for 43.2% of the national total. Even though Airbnb is a digital entrepre-
neurial business form, its direct and derived job creation effects are still
considerable in the local economies.
Besides generating jobs, Airbnb also generates additional economic
value. Table 5.5 presents Airbnb’s income (GVA) effects broken down
into cities and regions. GVA is calculated as the total value of produced
goods and services without added production taxes. Airbnb generates in
Table 5.4 Airbnb employment effects in cities and the regions (number of full-
time equivalent jobs)
Area Direct effects Total effects % of the total
Copenhagen 1,871 2,449 43.2

Aarhus 260 362 6.4
Odense 65 101 1.8
Aalborg 81 120 2.1
Sum from the four cities 2,278 3,031 53.5
Rest in the Capital City Region 700 1,283 22.7
Zealand Region 223 499 8.8
Rest in The Southern Denmark 236 392 6.9
Region
Rest in The Central Denmark 166 304 5.4
Region
Rest in The Northern Denmark 101 153 2.7
Region
Total Denmark 3,704 5,662 100.0
3
0
1

Table 5.5 Airbnb income effects in cities and the regions (DKK mill.)
Area Direct effects Total effects % of the total
Copenhagen 980 1,426 41.3

Aarhus 125 191 5.5
Odense 35 57 1.7
Aalborg 38 63 1.8
Sum from the four cities 1,178 1,737 50.3
Rest in the Capital City Region 460 873 25.3
Zealand Region 182 351 10.2
Rest in The Southern Denmark 132 230 6.7
Region
Rest in The Central Denmark 91 175 5.1
Region
Rest in The Northern Denmark 57 88 2.5
Region
Total Denmark 2,100 3,452 100.0
total DKK 3.4 billion GVA, of which DKK 2.1 billion is directly generated
income. As shown in Table 5.5, more than one-half of income creation
is from the four largest cities. In the capital city area, the total income
generated by Airbnb tourists is DKK 1.4 billion, accounting for approxi-
mately 41.3%.
The state also benefits from the personal income generated from
Airbnb. There are two sources of state revenues: personal income taxes
and VAT. Table 5.6 shows the results from personal income tax and VAT
effects. Airbnb contributes to revenues of DKK 556 million in income
taxes, and DKK 812 million in VAT. As explained in the methodology
section, Airbnb hosts do not pay VAT taxes, but Airbnb guests pay VAT
on the products and services they buy at the destination localities. Unlike
the above-mentioned economic measures (employment and GVA), the
four largest cities do not obtain high shares of income tax effects, but they
do have a high share (61.7%) of VAT effects. The reason for the lower
personal income taxes in the cities is the commuting patterns. As house
prices are relatively higher in large cities than in the surrounding muni-
cipalities, service-sector employees often live in the surrounding areas.
Therefore, personal income tax effects are transferred to the residential
municipalities that surround larger urban destinations.
To summarise, by combining Tables 5.4 and 5.5, we can calculate
the employment and income effects per million DKK of tourist revenue.
According to the experiment results, DKK 1 million of tourist revenue
from Airbnb tourists provides 0.7 jobs in Copenhagen and 0.96 jobs in
Aarhus, which is the second largest city in Denmark. The job generation
in the capital city area is lower than in other big cities and peripheral
regions, which can be explained in higher productivity and economies of
scale in the capital city area compared to the other regions. On average,
4
0
1

Table 5.6 Airbnb effect on income taxes and value-added taxes (VAT) in cities
and the regions (DKK mill.)
Area Income taxes VAT
Copenhagen 29.7 428.7

Aarhus 23.5 47.8
Odense 14.4 11.3
Aalborg 9.6 13.7
Sum from the four cities 77.2 501.4
Rest in the Capital City Region 312.1 149.6
Zealand Region 92.1 50.0
Rest in The Southern Denmark Region 40.9 48.9
Rest in The Central Denmark Region 40.7 37.6
Rest in The Northern Denmark Region 16.2 24.8
Total Denmark 556.2 812.4
Airbnb creates 0.95 jobs in Denmark per DKK 1 million of tourism rev-
enue. As explained in Leich et al. (2020), the results from this experi-
ment also show that Airbnb is not as large a job generator as hotels and
other traditional accommodation businesses. However, Airbnb creates
additional economic value through GVA and taxes. Likewise, we can
calculate that DKK 1 million of Airbnb tourism revenue brings an add-
itional gain of DKK 0.41 million of GVA in the capital city area and
DKK 0.5 million in Aarhus. On average, Airbnb tourism generates DKK
0.58 million GVA per DKK 1 million revenue, in addition to state revenue
in terms of personal income taxes and VAT.
In absolute terms, the socioeconomic effects of Airbnb are mainly in
the urban areas, as most listings are in these areas (about 60% of total
listings in Denmark). However, in a relative comparison between the
four big cities and the peripheral regions, we find that total (direct and
derived) employment effects per listing are higher in the peripheral regions
than in the cities (index 0.19 in the peripheral regions against 0.15 in the
cities). Similar results were observed for GVA effects per listing, which
were higher in the peripheral regions compared to the cities (index 0.126
in the peripheral regions against 0.084 in the cities). Airbnb benefits per-
ipheral regions more through income taxes, which is explained by the
commuting patterns of workers from the suburban and outskirt munici-
palities to the cities. There were 0.035 revenues created per listing in the
peripheral regions compared to 0.004 in the cities. The VAT effects show
a little higher effect in the cities than in the peripheral regions (index 0.024
in the cities against 0.023 in the peripheral regions) (see Figure 5.1). The
relative comparison shows how much Airbnb tourism affects the develop-
ment of local economies in the peripheral regions. It indicates that Airbnb
generates more socioeconomic value in the peripheral regions than in the
cities, which could be a good indication for the policy makers and planners
to encourage the development of Airbnb businesses in the peripheral areas.
5
0
1
0.250
0.200
Index
0.150
0.100
0.050
-
Employment effect Income effect Income tax effect VAT effect
Urban Coastal/peripheral
Figure 5.1 Total socioeconomic effects of Airbnb per listing by type of region

(2017).
Note: Y axis is the index for the effects of per listing, which is calculated as the
ratio of the total effect to the number of listings by type of region.
Conclusion
As digital entrepreneurship, Airbnb has spread over many countries in the
world. It is one of the main forms of business activity in digital entrepre-
neurship that allows the providers (hosts) and consumers (guests) to con-
duct business interaction at low cost and high flexibility through digital
platforms. This form of business has already changed our everyday life: it
has changed tourist behaviour with regard to travel, personal transport,
cultural experience and choice of destination.
Airbnb influences the current tourist markets. It stresses the value
of co-creation, co-experience and dynamics in the tourist supply and
demand chains. It helps tourist destinations to provide visitors with a
wide range of products and services at more affordable prices. Airbnb
facilitates authenticity and encounters between tourists and the residents,
although it creates challenges to traditional accommodation providers,
especially small hotel businesses, in retaining their market share.
The aim of this chapter is to study the socioeconomic value of Airbnb
tourism and its direct and derived effects on the local economy in different
types of destination municipality such as urban and peripheral. The scen-
ario experiment was established for this analysis in the interregional quan-
tity model. The results of the experiment show that Airbnb business is still
an urban phenomenon and the absolute volume of economic effects is also
greater in urban regions rather than in peripheral areas. The experiment
also demonstrated that, even though the Airbnb business is a form of digital
entrepreneurship with the business interactions on the digital marketplace,
6
0
1

it generates considerable additional economic gains both physically (i.e.
Airbnb tourists spending on products and services) and geographically (i.e.
creates additional demand at the different types of destinations such as
urban, coastal/peripheral). The experiment showed that the relative eco-
nomic effects of Airbnb tourism are higher in peripheral regions than in
cities, especially considering job creation and income taxes. This points to
future potentials for developing Airbnb activities in the peripheral regions
through supportive policies and provisional institutions.
The digital entrepreneurship business model allows the flexibility and
simplicity to conduct Airbnb business outside of urban areas, especially
in the popular tourist destinations in peripheral municipalities. Creating
policy instruments and increasing awareness in the population with high-
speed internet coverage can motivate and diversify the economic poten-
tial of Airbnb tourism in peripheral destinations in Denmark. As other
scholars have also emphasised, there is a need to create regulative and
institutional systems around the digital forms of business activity in order
to secure sustainable growth (Geissinger et al., 2019; Kraus et al., 2018).
The theoretical argument for supporting sharing economic activities,
including Airbnb, is that the business model is innovative and creative,
and it has derived effects on economic activity within some areas of ser-
vice. If additional supply induces an extra demand on the market, while
simultaneously saving resources and increasing productivity, this will lead
to an expansion of the local and regional economies. Airbnb business
activities, characterised by the digital transactions, create possibilities for
individuals to become entrepreneurs and service providers. Therefore,
there are also other issues that should be further discussed in future
studies, for example, how to control the quality of services and how to
regulate the activity to guarantee that the market is not disturbed, and
society continuously benefits from it. For example, it has been suggested
that we could implement licensing and registration. Individuals who plan
to do Airbnb business would have to register or obtain a licence from the
tax authorities. Policy makers can use this registration to guide regional
policy, such as in the peripheral regions, and possibly issue more licences
than in the urban regions.
The research on Airbnb and digital entrepreneurship is in the early
phase. Topics for further investigation cover a wide array of questions
through the interdisciplinary fields. Rapidly growing Airbnb tourism
stresses the necessity of accelerating the process of generating scientific
knowledge about this form of tourism and developing an institutional
and regulatory framework around it, in order to ensure that it continues
to benefit the economy and society.
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6
How Can Digital Entrepreneurship
Address Social Issues?
The Case of EkoHarita in Fighting
Ecological Disruption
Zeynep Özsoy and Beyza Oba
“The problem is the solution”

Bill Mollison
Introduction
During the last couple of decades, with the advent of internet, Web 2.0
and related digital technologies there has been an increase in the number
of organisations that are described as being part of the sharing economy.
The extant literature on entrepreneurship falls short of comprehending
the role played by digitalisation and users in transforming entrepreneur-
ship practices (Autio, 2017; Sussan & Acs, 2017). Users play a pivotal
role within these platforms, enabled by digital technologies users from
different geographies, with different value orientations participate and
contribute to the development of new products/services. Users, either as
volunteers offering free labour or as entrepreneurs, are engaged in value
co-creation. Sometimes called user-turned entrepreneurs, they are creating
platforms, business models and products/services (Sussan & Acs, 2017).
This study by implementing a single case study as a research method
(Eisenhardt, 1989) investigates a non-profit, peer-to-peer (P2P), know-
ledge sharing platform (EkoHarita) that emerged as an entrepreneurial
reaction to ecological disruption and inequalities in agriculture within
Turkey. The aim of this research is to provide an explanation regarding
how a non-profit, sharing economy platform, producing knowledge and
driven by digital entrepreneurs who share similar values and concerns,
is organised and carries out its operations. Furthermore, by offering an
explanation regarding the Turkish digital entrepreneurial ecosystem,
the study elaborates on how constraining legal and political conditions
activate creative entrepreneurs. Given inefficiencies in developing and
implementing solutions to ecological problems and strict restrictions on
digital media in Turkey, EkoHarita can be taken as an example of a plat-
form and entrepreneurial effort that attains its commitment to the cre-
ation of a social value. The study makes three contributions to the extant
literature on the sharing economy and digital entrepreneurship: first,
although there are numerous examples of labour and capital platforms,
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110 Zeynep Özsoy and Beyza Oba

there are few cases of knowledge platforms and EkoHarita contributes to
this strand of literature; second, by providing a comprehensive explan-
ation of the Turkish digital entrepreneurship ecosystem the study aims to
highlight the importance of the entrepreneurial ecosystem; lastly, there
are very few studies of the non-profit sector of the sharing economy and
EkoHarita is an example of a non-monetary platform where users employ
an entrepreneurial role.
The chapter is organised as follows: the following section reviews the
literature on sharing economy and digital entrepreneurship; the next
section explains the methodology utilised in this study. The findings are
presented in two sub-sections; the digital entrepreneurship ecosystem in
Turkey, with a particular emphasis on the enabling and the constraining
forces and the organisation of EkoHarita by focusing on the values of
digital entrepreneurs and emerging organisational arrangements. The
final section is comprised of discussion and conclusion.
Literature Review
Sharing Economy Platforms

Sharing economy organisations are digital platforms that create value
by facilitating interaction between users, rather than producing tangible
items (Acquier et al., 2017; Constantiou et al., 2017; Frenken & Schor,
2017; Strømmen-Bakhtiar & Vinogradov, 2020). Digital platforms, by
providing an open infrastructure, a means by which to carry out secure
transactions, and a valid reputation system, facilitate the reduction
of transaction costs and improve innovation (Strømmen- Bakhtiar &
Vinogradov, 2020). Extant literature provides a classification of sharing
economy platforms, according to platform orientation (profit or non-
profit), type of provider (P2P or B2P), platform architecture (the struc-
ture and informational content), and motivation of the users (Parigi et al.,
2013; Schor, 2016; Rivera et al., 2017; Bucher et al., 2016; Acquier et al.,
2017; Gerwe & Silva, 2020).
The value chain in P2P platforms focuses only on production, and net
replaces the distributors (Bruns, 2008). Especially, in those platforms like
EkoHarita that produce knowledge, production “takes place in a collab-
orative, participatory environment which breaks down the boundaries
between producers and consumers and instead enables all participants
to be users as well as producers” (Bruns, 2006, p. 2), a situation called
produsage. In produsage the traditional roles attributed to users and pro-
ducers change; consumers, as active users, lead projects and become key
contributors. In the sharing economy ownership of a particular asset
is temporary (Hamari et al., 2016; Frenken, 2017; Frenken & Schore,
2017; Gerwe & Silva, 2020), i.e. products, services and knowledge do not
change hands; they are collaboratively produced and shared. Non-profit
platforms, like EkoHarita, which operate in order to provide a public
1
The case of EkoHarita 111

benefit, can function as ‘public goods’ and generally utilise a democratic,
horizontal and participatory governance model (Schor, 2016; Rivera
et al., 2017). Non-profit sharing economy platforms focus on social and
environmental issues and aim to develop connections within communi-
ties rather than pragmatic individualistic exchanges (Rivera et al., 2017,
p. 12). User of these platforms are driven by relational goals (community
building, gaining knowledge), altruistic, moral motives (Bucher et al.,
2016), a desire to establish new social relations through the platform
(Parigi et al., 2013) and a commitment to social transformation (Schor,
2016). Especially, in the case of non-profit, P2P platforms, participants
explicate their commitment to a specific set of ideas.
Digital Entrepreneurship
The sharing economy is a type of digital entrepreneurship that is based on
digital technologies (Leick et al., 2020) and sharing economy platforms
with reliance on digital technologies have also shaped the entrepre-
neurial landscape (Richter et al., 2017). Digital technologies impact
innovation and entrepreneurial activity (Zaheer et al., 2019, p. 2) and
enabled the emergence of a new group of entrepreneurs (Richter et al.,
2015; Sundararajan, 2016) composed of geographically dispersed users
that are driven by utilitarian, altruistic and hedonic drives. According to
Sussan and Acs (2017), there are four types of entrepreneurial and digital
ecosystems that reflect the positions taken by users, institutions, digital
infrastructure and agents. In line with this classification we have taken
EkoHarita as a case of digital citizenship (Mossberger et al., 2007) where
users become entrepreneurs. In the case of digital citizenship users are
regularly involved in online activities and create online content or par-
ticipate in a movement (Sussan & Acs, 2017; de Moraes & de Andrade,
2015). In this type of digital entrepreneurship users who share similar
concerns are taken as entrepreneurs who are driven towards a platform
for advocacy on a controversial issue. In relation to the motives of the
user entrepreneurs EkoHarita is also an example of digital social entre-
preneurship where the mission of the platform is social value creation
(Tauber, 2019) as opposed to wealth creation. Furthermore, as coined
by Mair and Marti (2006), social entrepreneurship is a process that aims
to cause a social change and are “catering to locally existing basic needs
that are not addressed by traditional organisations” (Mair, 2010, p. 4).
The extent of the social impact generated by the platform reflects its
competency in value creation (Dees, 1998, revised 2001) which mainly
resides in developing networks by establishing and cultivating social
connections with different constituencies. As is the case of digital citi-
zenship, extant social entrepreneurship studies emphasise the role of
entrepreneurial ecosystem/context in shaping the aims and the form of
entrepreneurial initiatives. For example, Tauber’s (2019) study discusses
the different roles assumed by social enterprises in authoritarian regimes
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and developing countries. Similarly, de Bruin and Lewis (2015) explain
how context influences and shapes the form of a social enterprise.
Based on the arguments developed by extant studies on sharing
economy, digital and social entrepreneurship this study proposes that the
emergence of sharing economy initiatives such as EkoHarita is rooted
in a specific context that is characterised by political, legal, economic
and social conditions. Entrepreneur(s) with a specific value set can rec-
ognise voids, unmet needs in this context, and can reflect on developing
solutions. The possibilities and limitations in the digital ecosystem guided
by the values and motives of the entrepreneur(s) provide a basis for the
development of solutions. The output of these entrepreneurial activities
is expected to be a platform with a specific orientation (for profit or non-
profit), operations and governance model.
Methodology
The aim of this research is to provide an explanation regarding how
a non- profit, sharing economy platform, producing knowledge and
driven by digital entrepreneurs who share similar values and concerns,
is organised and carries out its operations. The study uses a single case
study as a research method (Eisenhardt, 1989). EkoHarita was chosen as
a case because it is a rare and extreme example in Turkey. Such examples
allow researchers to gain insight to study the concepts and their rela-
tion to each other (Yin, 2003; Eisenhardt & Graebner, 2007; Siggelkow,
2007). In order to provide a deeper understanding of the examined plat-
form the study focuses on three fundamental issues: dominant values,
aims and how operations are carried out to ensure the reliability of the
output. Furthermore, by providing a nuanced explanation about the
Turkish digital entrepreneurial ecosystem the study aims to explain how
the ecosystem in which a venture is embedded shapes its objectives, orien-
tation and governance.
Data and Collection Procedures

The data for this study was collected from three sources: unstructured
interviews, participant observation and archival material. As indicated
by Yin (2003) multiple sources of information are useful to ensure the
validity of the data. In June 2018 we contacted one of the founders of
EkoHarita and conducted the first interview. Following the first interview
we arranged a series of interviews with other founders, volunteers and
stakeholders. In choosing our informants we followed purposeful sam-
pling. Initially, we approached informants who were expected to have
the most information and experience in relation to our research question.
Later, we also employed theoretical sampling as we proceeded with the
analysis of the data and the identification of information considered to
be important by the previous informants. This process of data collection
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1

continued until no new information was acquired, a situation called ‘satur-
ation’ by Glaser and Strauss (2017). In-depth, ‘active’ interviews (Gubrium
& Holstein, 1997) with EkoHarita members and other stakeholders lasted
on an average 52 minutes and were transcribed verbatim.
Although the sample was diverse in terms of gender, all informants were
educated middle-class professionals. We did 12 interviews. To provide a
deeper understanding, as well as interviewees involved in EkoHarita we
also interviewed members of other initiatives such as alternative food
network (AFN) cooperatives, climate activists and Farmers’ Union, all of
whom collaborate with EkoHarita. This was also helpful for validation
purposes. In this group we did six interviews. Table 6.1 provides detailed
information about the interviewees.
In order to conduct participant observation, the first author attended
offline events organised by EkoHarita, a workshop on AFNs organised by
the Earth Association (Yeryüzü Derneği) and a university in İstanbul, as
well as a festival on environmental issues organised by the Municipality.
Finally, for triangulation purposes, we used archival data and documented
posts, announcements and articles appearing on the Facebook and
Instagram accounts of EkoHarita which were helpful in identifying the
range of activities involved and dominant values communicated.
Data analysis was carried out in two stages. In the first stage, archival
material and interviews were used to understand how EkoHarita as a plat-
form, and political, ecological and legislative voids related to agriculture,
Table 6.1 Interviews and interviewees
Role in the Affiliation Age Gender Profession/ Duration

platform Education (in minutes)
Stakeholder AFN cooperative 30–35 Female Industrial Designer 50

Stakeholder AFN cooperative 30–35 Female PhD student 46
Stakeholder AFN cooperative 20–25 Female Undergraduate 60
student
Volunteer EkoHarita 35–40 Male Bachelor’s in 55
& AFN Education
cooperative
Stakeholder AFN cooperative 35–40 Male Food Engineer 50
Stakeholder AFN cooperative 45–50 Male Professional 35
sportswomen
Volunteer EkoHarita 30–35 Female Industrial Engineer 58
Stakeholder Farmers’ Union 55–60 Male Agricultural 120
Engineer
Founder EkoHarita 30–35 Male Bachelor’s in 183
Economics
Founder EkoHarita 30–35 Male Industrial Engineer 22
Founder EkoHarita 30–35 Female Music Teacher 35
Volunteer EkoHarita 25–30 Male Software developer 60
TOTAL 720
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ecology and internet have evolved in Turkey. In this stage we identified
five context specific issues –ecological degradation, crises in agriculture,
the media industry and conditions facilitating social media, legislation
on internet usage and internet infrastructure enabling digital economies
as constraining or enabling the founding and operations of EkoHarita.
In the second stage of data analysis, participant observation, interviews
and archival data were used to identify how context-specific issues and
values of the entrepreneurs shaped the platform orientation (for profit or
non-profit), scope of operations (knowledge production and dissemin-
ation), governance (heterarchy) and volunteer work. In other words, the
analysis at this stage focused on the activities of a special group of digital
entrepreneurs in the Turkish context.
The Research Setting: The Digital Entrepreneurial Ecosystem

in Turkey
The initiation, development and sustainability of sharing economy
initiatives and digital entrepreneurship cases are influenced by the eco-
system in which they are embedded. Therefore, in this section, the
Turkish government’s policies and regulations in relation to the environ-
ment, media and digital infrastructure will be studied.
Over the last couple of decades ecological problems have been
increasing worldwide and particularly in Turkey. Due to industrialisa-
tion, rapid population growth and urbanisation Turkey faces massive
ecological disruption. According to the Environmental Performance
Index (EPI) 2020, Turkey ranks 99th out of 180 countries with a score of
42.6 and over a period of ten years improvement in the overall score has
been very low. According to the same report Turkey is rapidly losing its
wetlands, due to increased nitrogen oxides (NOˣ) rates, facing more and
more acid rains, and a rapid increase in greenhouse gas emissions. Given
this background the government has taken significant steps, by drafting
various legislations, formulating regulations and developing organisations
that facilitate solutions to environmental problems (Adaman et al., 2016).
However, despite all these initiatives environmental problems persist. The
underlying causes of this paradox can be explained by the tendency of
the government to prioritise economic growth and industrialisation over
the cost of environmental degradation (Adaman & Arsel, 2013; Adaman
et al., 2016). Environmental degradation also had consequences for
agriculture; since 1985 Turkey suffered a 15% decrease in its croplands
(OECD, 2019) and currently the country is facing an acute food crisis due
mainly to the environmental problems discussed above but also because of
massive urbanisation. Escalating environmental and agricultural problems
triggered numerous protests (Önal, 2016; Tuğal, 2013) and Turkey has
witnessed a rise in ecological activism and civic mobilisation.
Another ecosystem issue related to EkoHarita’s digital entrepreneur-
ship is the structure of the media industry and the dominant role assumed
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by the state in Turkey. Governmental organisations like the Press Notices
Agency (BİK) and Directorate of General Press and Information (BBYİK)
control the printed media through various mechanisms such as the dis-
tribution of advertisements (Saka, 2020). This propensity to control
and reshape the media industry has gradually led to an industry struc-
ture which is characterised by a concentration of ownership and biased
relations among media owners and government. As the mainstream
media became tightly controlled by the government, readers, especially
the younger generation, in search of reliable sources, started to use social
media (Tunç, 2015; Akdenizli, 2017) and digital platforms.
Studies on internet usage in Turkey demonstrate a vibrant internet cul-
ture and heightened social media usage alongside rising web censorship and
control (Tunç, 2015; Yeşil, 2016; Saka, 2020). The first internet-specific
legislation in Turkey was drafted in 2007 with an expressed aim to protect
children from harmful and illegal content. With the increase in internet
usage the internet law was amended in 2014 (Law 5651) to include con-
tent removal and data collection provisions.1 Over the following years
the government passed various decree-laws to tighten internet control
(Yeşil & Sözeri, 2017). Violations of the legal requirements incur financial
penalties and the license of the provider can be invalidated. Given these
structural and legal reinforcements the government, since 2007, has taken
serious steps to control and ‘clean’ the internet, ultimately giving way to
the censorship of websites (for example, YouTube, Wikipedia, Facebook,
Alibaba) (Akgül & Kırlıdoğ, 2015). As can be seen from this evidence, in
the case of printed media and also especially the internet, the Turkish gov-
ernment has followed a very decisive policy in order to control and direct
the content of media communications; this, in turn, drastically influences
freedom of speech2 and the growth of digital economies (Saka, 2020).
A further issue, which influences digital economies in Turkey, is linked
to government policies for the development of an efficient internet infra-
structure. According to the Inclusive Internet Index 2020 (The Economist,
2020) affordability is the major problem for Turkish internet users; a
restrictive market concentration in broadband provisioning leads to high
prices for internet usage. On the other hand, Turkey scores compara-
tively highly on readiness (availability of skills and culture inclination to
internet usage) and relevance (existence of localised language and con-
tent). Simply put, Turkish citizens are ready to use digital platforms, but
it is expensive to do so, and the available content is under strict control
and surveillance by the government.
Findings
Identifying the Problem and Developing Aims

Given these conditions in the prevailing ecosystem, a group of young
citizens concerned with ecological problems within agriculture and in
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search of reliable and affordable knowledge related to ecology and AFNs
are engaged in the development of a non-profit, P2P, knowledge plat-
form, EkoHarita. The seeds of the platform were sown in 2010 during
a conference organised by the Turkish Permaculture Research Institute.
In January 2015 the same group decided to develop EkoHarita as a pro-
ject aiming to solve the problem of healthy, good quality, ecological
food provisioning in the cities. The platform infrastructure was prepared
by five young digital entrepreneurs. The platform became available to
users in January 2016; since then many others have joined the group
as volunteers. The core group of founders had experience in building
websites for non-profit projects. In order to learn the business and man-
agement side of such a project they joined the training program of a social
entrepreneurship incubation centre run by a university. In line with their
initial focus the founders decided to prepare a virtual map showing AFNs
in Turkey. One of the founders stated that:
at the beginning we were planning to prepare a map that only showed

AFNs, later we enlarged the project by adding city gardens, ecological
collectives, farms, training programs, tourism centres.
The founders of EkoHarita aim to serve as a non-profit platform which

creates value by collaborative filtering. The major concern for this group
of entrepreneurs is to provide timely and accurate knowledge that is free
of charge and in Turkish, and build up virtual and physical communities,
solidarity networks that are helpful in connecting people with similar
values and raising awareness.
Driving Values
The core values of EkoHarita are shaped around the principles of perma-
culture and AFNs. As a digital entrepreneurial venture, the entrepreneurs
of the platform aim to share and diffuse permaculture ethics (care for the
earth, care for the people, return surplus, do not exploit) with a wider
audience. The permaculture principles aim to create systems that are
ecologically sound, economically viable and sustainable in the long run
(Mollison et al., 1991). The prime directive of permaculture is based on
cooperation, not competition. The most important principle of permacul-
ture is the ‘law of return’ which is very similar to the defining character-
istic of the sharing economy. Finally, permaculture considers information
as a critical resource, which becomes valuable only when shared and
acted upon. By adopting the ethics of permaculture and applying its
principles in their daily life the EkoHarita founders and volunteers are
actively involved in building communities that resist the environmental
degradation that is mainly caused by savage industrial production. It is
also expected that the implementation of permaculture principles by the
producers and consumers of agricultural products will lead to reduced
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costs and thus prices so that ecologically safe food can be affordable to
all income groups.
The second set of principles that shape the underlying values of
EkoHarita are rooted in AFNs, i.e. mutuality, collective work, eco-
logical and social relationships and solidarity. The major concern of
AFNs is to overcome inequality in food provisioning (healthy, good
quality food should be affordable to all income groups), ethical con-
sumerism (social justice and environmental sustainability) and support
for small local producers who have lost their position in the mass-
produced food provisioning system. To overcome the crises in the
provisioning of safe, healthy and affordable food stuff to all socio-
economic groups in the society, EkoHarita as a platform gathers data
regarding ecological small producers and makes it available to all those
interested.
Motivation; If Not Monetary, Then What?

Like many other non-profit sharing economy initiatives EkoHarita is a
value-based venture. Since the platform entrepreneurs want to be inde-
pendent and avoid the intervention of the state or any other institution,
they do not accept advertisements or sponsorship. The major revenue
source of the platform is donations. Hosting and domain expenditures
are funded by these donations. As stated by one of the founders, “our aim
is to share, meet, and unite with a wider community. We want to build up
a sustainable system which is based on sharing”.
The most important motive for the founders of EkoHarita is to
produce something that did not exist before in Turkey, being part of a
new initiative. One of the founders stated that, “we do not have any
financial expectations. Our motivation is the work we’ve done and the
relationships that we build while working together”. Similar to many
other non- profit platforms, they value developing strong social ties
amongst the platform members. They are driven by the enjoyment of col-
lective work and cooperation. Also, during the production process they
can use their intellectual capabilities and enjoy doing self-determined
work. Establishing new social relations through the platform is especially
important for them. What they value most is being together with friends,
co-creating content that enables them to express their values, that are
shaped by the permaculture ethic and AFN principles.
Coverage
EkoHarita performs three major activities: content production, developing
a medium of knowledge exchange and providing a space for the devel-
opment of new projects. In relation to content production EkoHarita
functions as a data silo and an intermediary between those who want to
access reliable, valuable knowledge and those who provide it. Any entry
8
1

made is controlled by editors to prevent the sharing of inappropriate,
impartial, illegal and inaccurate content.
Content production covers three services: the newspaper, library and
eco-map. The content of the newspaper is comprised of previously made
entries on EkoHarita and articles in other ecology-related journals. The
newspaper offers up-to-date, concise information on current ecology-
related debates. Currently, the library offers links to various sites that
provide information on alternative economies, ecological architecture,
city gardening, healthy food, civic society organisations and environ-
mental activism. The interactive ecological map of Turkey (the eco-map)
provides information about AFNs. The founders, as a new entrepre-
neurial venture, decided to develop a web- based eco- encyclopaedia
(Ekopedi) that gathers, sorts and indexes ecological knowledge and is
similar in architecture to Wikipedia. With this project they aim to provide
an encyclopaedia that is free of charge and contains only ecology-based
content that is in Turkish.
The second major activity of EkoHarita is to promote information
and knowledge exchange amongst the registered members. Registered
members lead discussions and express their ideas through forums.
They can organise and announce new activities (for example, alterna-
tive holiday projects, eco- friendly camps, training programmes), and
workshops (like paper recycling, zero garbage) designed in line with
permaculture principles and aiming to change consumer habits.
The third major activity of the EkoHarita platform is to provide tools,
skills and labour for the development of new projects related to addressing
ecological problems and the betterment of the food provisioning system in
Turkey. These projects are collaboratively developed by volunteers. One
of the current projects is related to AFNs. The project provides real-time,
trustworthy information about all the AFNs in Turkey. The database
developed by EkoHarita helps users to locate ecological food producers
and enables them to create their own communities to purchase directly
from these producers. Updating the project with real-time data will facili-
tate bulk purchases from small producers that adhere to the norms and
principles of ecological farming, which, in turn, will be useful to help
small producers to scale up. Another project, ‘Nature Will Be Your Way’,
aims to form a virtual meeting place where people living in cities meet
with ecological farmers. It is expected that these meetings will promote
cultural and educational experiences based on trust and non-monetary
exchanges and will be useful in building a sustainable community.
Work, Organisation and Governance

At EkoHarita all work is done by users (known as volunteer members)
who offer their labour voluntarily and a support team of 24 volunteers.
The volunteer group is diverse in terms of gender and embraces people
from a variety of professions such as engineers, economists, musicians,
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1

academicians, software developers, graphic designer and artists. They are
well educated, young (20–35 years of age), white-collar professionals.
All of them share a common will to be part of the platform and its
projects, value sensitivity to ecological issues and share the ethical
principles of permaculture. Most of them have been involved in the eco-
logical movement previously and already participated in other ecological
initiatives. A volunteer explained that:
when I was studying music at the university, I was member of an

orchestra to protest hydroelectric power plants. We were playing
music in places stricken by ecological disruption. After graduation,
I decided to enrol in a certificate programme that provided training
in permaculture, I heard about EkoHarita and decided to join them.
Volunteers are recruited by open web calls and through informal

networks. Anyone who is willing to offer their time and energy volun-
tarily and has the capacity can join the group. There are no orientation
programmes for the new members. Volunteer members can choose the
activity they want to be part of. Work relations among the volunteers are
shaped by reciprocity. EkoHarita volunteers believe that sharing is deeply
rooted in Turkish culture. One of the volunteers stated that “we have the
‘imece’3 tradition, which is based on sharing, helping one another. We
want to reawaken this understanding”.
Currently, EkoHarita operates as a heterarchy where any task holder
can control and direct others and can be directed by them as well. It
is a non-hierarchical, ad hoc initiative where each volunteer has equal
power and authority. As stated by a volunteer “it is a platform without
a centre”. There is a consensus-based decision-making process; decisions
are not voted on and are not based on majority votes. Decisions are made
and implemented collectively by the volunteers and founders. Collective
decision-making is based on open, transparent communication and dia-
logue among the members. EkoHarita developed a project-based organ-
isation structure. Every project is carried out by a team composed of
volunteers. In line with self-determined work principles, new participants
are asked to choose a project that they would like to be a part of. If
they have the experience and expertise to carry out the project, they can
immediately join it; otherwise they are trained on-the-job by the group
members.
Discussion and Conclusion

Currently, most of the transactions in sharing economy platforms are
based on monetary rewards and are not free of charge. In that sense
EkoHarita represents an early example of the sharing economy and is
very similar to Wikipedia in mission and architecture. As is the case of
Wikipedia (Bruns, 2006), EkoHarita produces knowledge for use rather
0
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1

than for monetary exchange and the operations of the Platform are
shaped by sharing, cooperation and collective ownership of the know-
ledge produced.
As a non-profit platform the major motivation for the founders and
volunteers of EkoHarita is creating something new and being inde-
pendent and autonomous; the platform is a reaction to the mainstream
media industry and to the apathy of the government to ecological disrup-
tion. As is the case with other social entrepreneurship examples it aims
for social change (Mair & Marti, 2006; Mair, 2010), a change in the
food consumption habits, consumer-producer relations and in working
conditions. This is a type of activism which brings together people who
share similar concerns on similar problems. The platform provides an
opportunity to express ideas and offer alternative solutions. Also, in
line with the extant studies on non-profit sharing economy examples
(for example, Bucher et al., 2016) EkoHarita user entrepreneurs are
driven by more hedonic and altruistic motives. Furthermore, the plat-
form enables users to build a network and a community by promoting
connections to new friends. These new connections are instrumental
in enlarging the community, finding new volunteers and dissemin-
ating their mission and values. According to Parigi et al. (2013) such
connections are essential for the lives of the communities and the proper
functioning of democracies. In the case of EkoHarita the major resource
is information/knowledge and value are created as this knowledge is
shared by more and more users. Thus, connectivity and establishing
wider networks are essential for increasing the value of the platform
and its output.
EkoHarita as a knowledge sharing, free of charge platform is driven
by the users who are either followers or producers of the content. All
the knowledge and information appearing on the platform is built up
by volunteers. Although the founders of the Platform try to be inclu-
sive and open to all who are interested in ecological issues, and post
information about all producers positioned in AFNs regardless of their
political and social standing, they have to ensure the reliability of the
knowledge produced. In order to overcome information asymmetries
and avoid misleading or impartial information, entrepreneurs involved in
EkoHarita developed a set of norms and rules that are used as guidelines
by the editors. Developing reliable, impartial content and extending net-
work boundaries are important capabilities for non-profit knowledge
producing platforms since they enhance the social impact of the venture
and draw in more users.
The ecosystem in which sharing economy platforms are embedded
can create opportunities or constraints for the development of these
platforms. EkoHarita provides ample evidence regarding how the eco-
system creates a space of operation and about the demand for digital
entrepreneurs. The incapability of the government to take necessary
action to prevent environmental degradation and food crises created a
1
2

space for the operations of EkoHarita. Since the priority of the gov-
ernment has always been industrialisation, albeit via the institutional
and legal arrangements developed, Turkey still faces serious problems in
relation to the environment and agriculture. This void provides a space
for EkoHarita entrepreneurs. Similarly, Richter et al. (2015) discuss
the idea that for niche-filling activities the sharing economy provides
an opportunity for entrepreneurial initiatives. Activist groups composed
of small rural farmers and urban middle-class, educated, white-collar
professionals (Adaman et al., 2016) demand reliable, timely information
and knowledge about ecological problems, their solutions and AFNs.
Furthermore, governments’ inclination to control and reshape the struc-
ture and players within the printed media industry increases the demand
for social media (Tunç, 2015; Akdenizli, 2017) and digital platforms.
A constraint or limitation in one segment of the media industry led to
the creation of opportunities in another segment and the development
of a vibrant internet culture in Turkey. However, over time with the
increased use of the internet as opposed to mainstream printed media,
the Turkish government increased censorship, regulations and control of
the internet as well (Yeşil, 2016; Tunç, 2015; Saka, 2020) which, in turn,
negatively influenced the growth of digital economies. This online sur-
veillance regime (Yeşil & Sözeri, 2017) and expensive internet services
creates a threat in general for digital platforms. On the other hand, the
Turkish digital entrepreneurship ecosystem is empowered by users who
are equipped with the skills to use the internet and localised language for
software development. Limitations on internet accessibility due to high
prices can be a limitation for digital platforms. However, in the case of
EkoHarita, like any other digital citizenship examples, volunteers and
users are involved with the platform for advocacy of a controversial
issue. Thus, such limitations do not practicably restrict their participa-
tion. Furthermore, EkoHarita entrepreneurs also organise offline events,
as do many other examples of sharing economy platforms (Hamari
et al., 2016), which is useful in enlarging their network and attracting
more users.
EkoHarita entrepreneurs currently face two major dilemmas: the first
is related to their initial founding principles that aimed to be independent
of mainstream, corporate-led media and the second is related to sustain-
ability. EkoHarita, which is based on decentralised, democratic methods
of content development and knowledge sharing, is offering an uncon-
ventional alternative to existing platforms. Like many other examples of
content creation (Waltz, 2005), the digital entrepreneurs at EkoHarita
are challenging media power in terms of the way content is produced and
disseminated. The main consideration for the EkoHarita founders and
volunteers is to avoid being part of the corporate-led internet which is
based on profit maximisation. Though, as an alternative platform, they
are trying to challenge mainstream corporate platforms, they also depend
on corporate social media such as Facebook, Twitter and Pinterest.
21

Although the EkoHarita website provides tools to connect and develop
forums, citizens in Turkey prefer Facebook, Twitter and Instagram as
an exchange medium, making it difficult to relocate them to EkoHarita.
Using social media alongside their own platform is a dilemma that they
need to resolve.
The other dilemma EkoHarita founders face is related to sustain-
ability. As a civic, non-profit platform, aspiring to be autonomous and
free from the interventions of the government and big corporations, they
are challenged by a shortage of financial resources. To adhere to their ini-
tial values and concerns the founders and volunteers of the platform are
drafting future plans which include the incorporation of blockchain tech-
nology into their system and developing a digital open bazaar for eco-
logically safe food stuff which will enable buyers and sellers to transact
directly. Such an entrepreneurial venture will be beneficial for different
constituencies; small farmers, who lost their position in the conventional
agriculture system will be able to re- connect and urban citizens will
have access to healthy, ecologically safe food stuff at reasonable prices.
Furthermore, the EkoHarita founders’ vision for a decentralised govern-
ance system that is fair and just in the distribution of rewards to all bene-
ficiaries will be realised.
One of the major arguments of this case study is that non-profit,
value-driven digital, P2P platforms are viable in ecosystems dominated
by large, mainstream media companies. The case of EkoHarita provides
ample evidence as to how a group of entrepreneurs, driven by the values
of permaculture, and AFNs can initiate, maintain and develop strat-
egies for sustainability for a platform that is financially independent and
autonomous in governance. The evidence provided by this case study can
prelude research into similar platforms. The findings of this study are
based on a single case in a specific ecosystem and confirmation of the
discussions provided by other studies in other ecosystems will strengthen
the arguments developed and will lead to more generalisable and robust
claims. Another limitation of this study is related to the ecosystem; due
to the volatility of the economic and political conditions in Turkey, it will
be difficult to predict the future success or failure of such digital entrepre-
neurship cases.
Notes
1 Detailed explanation is provided by Akdeniz and Altıparmak in their book
entitled Internet: Restricted Access, A Critical Assessment of Internet Content
Regulation and Censorship in Turkey, İmaj Kitabevi.
2 The Freedom House Report (2020) reveals that the internet freedom status of
Turkey is “not free” and internet usage remains highly restricted.
3 Imece is a traditional labour sharing system in rural Turkey. During harvests
farmers help each other to accomplish a specific task, on time and promptly. It
is based on reciprocity.
3
2
1

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7
Fostering Open Innovation
in Digital Startups
An Explorative Study of Norwegian
Coworking Spaces
Anh Nguyen Duc and Simode Sperinde
Introduction
As a special instance of the sharing economy trend, providing access to
shared physical and intangible assets, coworking spaces (CWS) have
become a popular phenomenon among digital entrepreneurs (Cabral &
Winden, 2016; Moriset, 2013) in that they create a community based on
shared values of collaboration, openness, trust, accessibility, and sustain-
ability (Capdevila, 2014; Waters-Lynch et al., 2016), an ideal context
for digital startups to thrive. Digital startups, or software startups, are
companies with short operational history, working towards a scalable
business model, and having software as a significant part of their value
proposition (Nguyen-duc et al., 2020)
While it is true that CWS provide a cheap alternative to a traditional
office arrangement, digital startups managers have many more reasons to
choose them as their workplace. Perfectly in line with the sharing economy
framework, CWS connect diverse organizations and individuals, giving
them the chance to collaborate, share knowledge, and develop systemic
solutions to the issues they are trying to address.
The openness, the collaborative culture and the feeling of community
suggest that individuals or startups have a good potential to seek external
resources in the CWS they are sitting in. However, the role of CWS in
facilitating inter-organizational collaboration is controversial (Spinuzzi,
2012). In one scenario, coworkers can work on their own objectives, cir-
culating their own networks of resources. In another one, coworkers can
collaborate by providing and consuming value beyond the companies’
boundaries.
As one of the known threats to early stage startups, digital entrepreneurs
often find a lack of connections and useful contacts. CWS provide oppor-
tunities for interaction and collaboration, boosting entrepreneurial self-
efficacy (Cabral & Winden, 2016). However, Parrino (2015) argued that
mere co-location alone does not foster collaboration that lead to innov-
ation, and some sort of organizational mechanism is required for collab-
oration between coworking members. We are interested in understanding
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128 Anh Nguyen Duc and Simode Sperinde

which setting of a CWS can encourage collaboration and innovation gen-
eration among entrepreneurs and startups in the digital sector.
Open innovation, a conceptual framework by Henry Chesbrough
(Chesbrough, 2003), suggests a way to look at inflows and outflows of
knowledge to accelerate internal innovation, and expand the markets for
external use of innovation, respectively. Although open innovation is a
large research area (West & Bogers, 2013), there has been no attempt to
adopt the paradigm in the context of digital startups in CWS. From our
research objective, we derive two research questions:
• RQ1: To what extent does open innovation occur for digital startups
in the context of coworking spaces?
• RQ2: What is the role of coworking spaces in fostering open innov-
ation for digital startups?
This work aims to contribute to both the literature about CWS and
about open innovation in the context of startups in the digital sector,
by proposing a novel point of view of both phenomena, which was not
considered before.
Related Work
Coworking Spaces
CWS represent a multifaced phenomenon that has implications on
various research principles, i.e. urban design, smart city, innovation
management, and entrepreneurship (Gandini, 2015). It is also difficult
to have a clear definition of CWS (Capdevila, 2014; Waters-Lynch et al.,
2016; Spinuzzi, 2012), with various emphasized characteristics of the
phenomenon. According to the Oxford Dictionary, the term coworking
refers to
The use of an office or other working environment by people who

are self-employed or working for different employers, typically so as
to share equipment, ideas, and knowledge. Capdevila et al. define a
coworking space as a localized space where independent professionals
work sharing resources and are open to sharing their knowledge with
the rest of the community. Raffaele and Connel defined a coworking
space as a practice where people occupy a desk on a casual or tem-
porary basis in a workspace that is shared with others.
(Raffaele & Connel, 2016)
Waters-Lynch and Potts (2017) argued that a CWS represents “a focal

point that enables tacit coordination among independent knowledge
workers.” In this article, we focused on the ability to foster collaboration
with people in the same workspace.
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Fostering Open Innovation 129

Collaboration among members is the competitive advantage of a CWS
with respect to a serviced office (Parrino, 2015). CWS are found to pro-
vide a mechanism with internal social networks, regular events organized
by the owners and designed common areas for facilitating collaboration
(Waters-Lynch & Potts, 2017).
Capdevila proposed a model to capture how innovation develops in a
CWS (Capdevila, 2015). The author identified four dimensions: places,
spaces, events, and projects. Places represent physical locations where
people interact. They are the basis for the generation of the so-called
“local buzz” (Bathelt et al., 2004) and the starting point for the dynamics
of innovation at a local level (Rantisi & Leslie, 2010). While people
in places are characterized by geographical proximity, cognitive prox-
imity is the distinctive element of spaces. Spaces are figurative locations
(Capdevila, 2015) where people interact and share knowledge. The com-
bination of places and spaces is an ideal permanent platform that makes
people gather together and serves as the basis for the origin of innovation
processes. Projects and events represent temporary platforms with the
same purpose. Events contribute to the circulation of tacit knowledge by
allowing the participation of actors that would normally be distant from
each other. Thus, a larger community gains access and brings inputs to
locally generated knowledge (Capdevila, 2015). Projects help coordinate
and integrate different knowledge backgrounds, by involving people that
usually do not work together (Capdevila, 2015).
Open Innovation
Jones-Evans et al. proposed six key pillars of open innovation that can
be used by other researchers for their own surveys to assess open innov-
ation practices (Jones-Evans et al., 2018). The six pillars are: (a) know-
ledge and technology sourcing activities, (b) innovation expenditure,
(c) sources of knowledge, (d) human capital, (e) innovation networks,
and (f) IP protection. For the purpose of this research, not all the pillars
were considered. Pillar (b) was neglected, as the scope is not to evaluate
companies’ innovation level from the point of view of financial expend-
iture (this data might not be very significant when evaluating an early
stage startup’s innovation efforts), so it is more meaningful to assess the
innovation performance of a company by Pillar (a) only. Moreover, for
the sake of simplicity for the survey respondents, Pillar (e) –innovation
network –was not considered: it is very similar to Pillar (c) –sources of
innovation –and the related survey questions were written to get infor-
mation about both the aspects.
In synthesis, the following four out of six pillars were utilized:
Pillar 1 –Knowledge and technology sourcing activities: aside internal

R&D activities, companies have the possibility to buy new tech-
nologies from external sources. The outsourcing of machinery,
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software, hardware or any other form of technology is regarded
as having an influence on the absorptive capacity of a company
(Doloreux, 2015). The analysis of the sources of knowledge and
technology is therefore important to evaluate a company’s open
innovation approach.
Pillar 2 –Sources of knowledge: the origin of a company’s knowledge
is analyzed to understand what the company does to enrich its
intellectual capital. Along with several different actors, external
sources include all of the company’s stakeholders.
Pillar 3 –Human capital: the fourth pillar is about what drives the
firm’s internal innovation activity (Mariz- Pérez et al., 2012).
Interestingly, internal skills and knowledge, which are the
metrics of human capital, are thought to be fundamental in the
process of assimilating and applying externally acquired know-
ledge, i.e. the absorptive capacity (Cohen & Levinthal, 1990).
For this reason, the analysis of human capital is relevant in the
assessment of an open model of innovation.
Pillar 4 –Intellectual property protection: finally, open innovation
calls for cooperation and sharing of jointly generated knowledge.
However, companies should be able to protect their innovative
efforts in order to extract value from them and to participate
in the open innovation process (Laursen & Salter, 2014). This
ability is measured by looking at the number of IP protection
mechanisms a company resorts to.
Open Innovation and Coworking Spaces

The adoption of open innovation in the context of CWS remains unex-
plored in innovation management research. For open innovation to be in
place, a network is of crucial relevance (Lee et al., 2010). Formal cooper-
ation is often the result of informal talks and meetings, and knowledge
gets shared through a set of actors that are somehow interconnected,
namely a network. In this instance, CWS come into play. CWS are open,
both literally and figuratively: there are no walls and the desks are often
shared by coworkers, and the information flow is facilitated by the organ-
ization of events and by common spaces. The way they might act as an
intermediary for open innovation is easily recognized. Not only CWS help
to lower the amount of many expenses such as office rent and electricity
(Capdevila, 2015). More importantly, the cost of accessing to resources
and competencies held by others is much lower than it would otherwise
be. Some CWS tend to specialize in one sector to host a set of coworkers
with similar capabilities, so it is easier for a company to find just the right
guy useful for its aims.
Capdevila (2013) proposes the view of CWS as microclusters. In
an attempt to explain the dynamics of innovation in coworking envir-
onments, the author compares shared offices to industrial clusters by
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recognizing many common characteristics: low entry barriers, spe-
cialization in a certain field, the ideology of “collaboration, openness,
community, accessibility and sustainability” and physical and cognitive
proximity. The so-called “local buzz” allows the access of every member
of the community to the knowledge sharing and to the potential learning
opportunities that arise within clusters and CWS, or microclusters. What
makes the difference are the insiders, firms for industrial clusters and
entrepreneurs and freelancers for CWS. The concept of microcluster helps
contextualizing open innovation in coworking spaces (OICS) by bringing
up the importance of the network and the concept of local buzz. Thanks
to serendipitous encounters (Bouncken et al., 2018), new learning oppor-
tunities, business channels, and collaborations easily arise in CWS, just
like the open innovation framework envisages.
Theoretical Framework
The interplay between places, spaces, events, and projects offers a fun-
damental way to examine CWS attributes. The interaction among
these elements, which is essential to maintain the operations of CWS, is
excluded from the scope of our research as it is already investigated pre-
viously. Besides, the indicators (or pillars) of open innovation also offer
the way to understand the level of open innovation in a specific context.
As the purpose of this work is to understand the connection between
CWS and open innovation, the combination of these two frameworks
gives us a theoretical foundation. Our RQs would explore the connection
between places, spaces, projects, and events and each of the pillars in the
open innovation framework (Jones-Evans et al., 2018).
Research Methodology
This chapter adopted a multiple case study approach and it targeted exclu-
sively Norwegian digital startups operating at CWS, without considering
firm-specific variables such as size, age, or revenue. Exploratory case
studies are used to investigate little known phenomena or one without
an established theoretical basis (Yin, 2003). We use this approach to dis-
cover whether open innovation occurs and in which way it happens in the
context of coworking. Eligible companies were identified through CWS
websites and then contacted to request their participation in the study.
Data Collection
The data collection was conducted in two phases, quantitatively and
qualitatively, between May 2018 and August 2018. First, a survey aimed
at measuring the extent of open innovation happening in CWS was sent
to several Norwegian startups operating at CWS throughout the whole
country. The survey was customized from an existing one, namely the
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Table 7.1 Investigated coworking spaces
Coworking Space Location
Colab Larvik
CoWorx Kristiansand
Gowork Asker/Drammen
Gründerhuset Hi5 Tønsberg
Gründeriet Sandefjord
Innovation Dock Stavanger
Ipark Stavanger
Mediekuben Bergen
Nordic Impact Oslo
Oslo House of Innovation Oslo
Startup Lab Oslo
Validé Stavanger
WorkWork Trondheim
Community Innovation Survey.1 Innovasjon Norge,2 the Norwegian

Government’s agency for the development of Norwegian enterprises
and industry, was contacted for help in reaching out to companies. The
agency kindly posted the survey on their private Facebook page, allowing
to collect more responses. The survey was sent to 230 companies based
at 16 different CWS in ten cities in Norway. A total of 37 answers was
collected bringing to a satisfying response rate of 16%.
Second, follow-up interviews were conducted with some of the survey
participants. We decided to conduct semi-structured interviews, which
enabled the interviewees to contribute with their own opinions devi-
ating from our designed questions. Ten interviews were done, but one
was discarded, as it was not believed to be significant for the research.
Quotes were extracted from the interviews’ texts and the most significant
ones are illustrated. In the scope of this chapter, we present the qualita-
tive insight from interview data. The profiles of these CWS are shown in
Table 7.1.
Data Analysis
The information obtained from the interview was analyzed qualita-
tively. A thematic analysis approach was chosen, following the guidelines
suggested by Braun and Clarke (2006). The texts of the interviews were
coded so as to spot patterns and allow an easier reporting of the data. The
difference with a pure thematic analysis is that here the questions targeted
some previously specified themes (namely, the model dimensions and the
link between open innovation and CWS) and no actual themes develop-
ment was necessary. Rather, as the interviews were semi-structured, sub-
themes and quotes related to the predefined themes were sought in each of
one interviewee’s answers: each question was asked for examining mainly
31

one dimension, but as the interviews were often run as conversations,
quotes related to other dimensions were found in several parts of the
interviews. The interviews transcripts were analyzed with the aid of a soft-
ware for text coding. Similar quotes were highlighted and grouped under
one sub-theme. Sub-themes were then clustered under one of the previ-
ously established main themes. As an example, “easiness of networking”
was used as a sub-theme, and the main theme in this case was the value
of the place dimension in the eyes of coworkers. Accordingly, the quotes
under the sub-theme “easiness of networking” were used for reporting
within RQ1 when it came to describing coworkers’ opinions of places.
Results
This section presents the findings for the two RQs.
RQ1: To What Extent Does Open Innovation Occur for

Digital Startups in the Context of Coworking Space?
Open innovation is evaluated via four pillars, (1) knowledge and tech-
nology sourcing activities, (2) sources of knowledge, (3) human capital,
and (4) intellectual property protection. In Table 7.2, we summarized
the answers from almost 40 digital startups in Norway regarding these
pillars.
Pillar 1: Knowledge and Technology Sourcing Activities

In general, coworking digital startups were found to be strongly
committed towards innovation, showing by their focused activities on
internal research and experimentation (67.57% of the total respondents),
design and development of new products or services (54.05% of the total
respondents). These findings might not be surprising because of the nature
of these startups. Their core value propositions base on digital software,
platforms, or services that require up-front investment on R&D. We
also observe many cases with significant acquisitions of knowledge or
technologies as assistance or enablers for what is developed internally
(48.65% of the total respondents). There are relatively less investments
on marketing activities in comparison to R&D activities.
Pillar 2: Sources of Innovation

Table 7.2 shows the major source of innovation (56.76% of the total
respondents) coming from inside the startups without any external
influences. These groups of startups might be independent of their
working place or the startup ecosystem. There is also a significant
number of startups (40.51%) having their innovation relating to early
customers. For example, a startup product appears as an evolution of a
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Table 7.2 Survey responses to the four pillars of open innovation in digital
startups
Pillar –Indicators Items Answer (out of

100%)
Pillar 1 –Main Internal research & development 67.57%

performed activities (R&D)
by digital startups Design and development of new 54.05%
products or services
Acquisitions of technologies, 48.65%
infrastructures, tools
Market research conduct 35.14%
Acquisition of R&D 24.32%
Training focusing on innovation 18.92%
adoption
Others 8.11%
Pillar 2 –The major Within the digital startups 56.76%
source of From early customers 40.51%
innovations From technology suppliers/partners 27.03%
From scientific journals or publications 16.27%
From conferences, fairs, exhibitions 14.51%
From professional and industry 13.51%
associations
From universities or research 10.81%
organizations
From external consultants 5.41%
From governments 2.1%
From competitors 1%
From industry standards or regulations 0%
Pillar 3 –The available User experience, branding 51.35%
competence in the Software engineering, data engineering 48.65%
digital startups Product/service design 48.65%
Content/community development 45.95%
Applied science, i.e. AI, Big Data 29.73%
Theoretical science, i.e. mathematics 18.92%
Others 29.73%
Pillar 4 –The most Design quality & performance 45.95%
important business- Market-lead time 24.31%
related quality Product complexity 24.31%
factors Trademarks 16.22%
Copyrights 13.51%
Secrecy 10.81%
Patent 2.7%
bespoke product for a large organization. Or startups might be invested

by other organizations to implement their ideas. We also observe that
innovation comes from important elements of startup ecosystems, such
as suppliers and partners, conferences and fairs, that confirm the import-
ance of networking activities within the ecosystems.
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Pillar 3: Human Capital
Table 7.2 also summarizes the competence or human capital that
Norwegian startups possess. It shows that artistic design for user experi-
ence, i.e. branding, is the most popular competence (51.35% of the total
respondents). Software and data engineering comes in the second place
(48.65% of the total respondents). Technology competences are signifi-
cant, as mentioned in either software development, database manage-
ment, and web design competence. A considerable amount of coworking
startups reported employing human resources with product and ser-
vice design. One would expect to see competences such as Artificial
Intelligence (AI) and Big Data occurring more and more in the coming
years. Fundamental research and science, i.e. mathematics, are the least
selected options, but still to a good extent.
Pillar 4: Intellectual Property Protection

As shown in Table 7.2, coworking companies do not seem to rely much
on intellectual property rights protection. Many of them believe that
market- lead time is very important in the competitive markets they
operate. Quality of design and performance is reported as relevant aspects
by almost half of the surveyed startups. They also seem to have faith in
the complexity of their products, as 24.31% of the respondents stated
it is either important or very important to their business. On the con-
trary, secrecy does not play any role according to most of the companies.
Copyrights and trademarks are believed to be quite important, whereas
patents are not considered much as part of the strategy by most of the
managers who answered the survey; 2.7% of the respondents consider
them very important.
A remarkable fact was found by asking entrepreneurs whether they had
ever found one of the aforementioned sources of innovation in their CWS:
92% of them answered yes, suggesting that CWS have the power of stimu-
lating companies’ innovating processes. Most of the entrepreneurs report
they had access to consultants and to customers through their working
environment. As expected, since CWS host several different professionals,
25% of the surveyed companies said to have encountered competitors
and suppliers at their workplace. Also, around the same percentage was
found to have gained the possibility to attend fairs or exhibitions within
the space. To a smaller, but still significant extent, professional associ-
ations, government, and university members were reported to provide
support for innovation to coworking companies.
Taking Away
Overall, coworking companies display a high level of innovativeness:
only 8% of the respondents reported not innovating at all. Coworking
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startups seem to rely on many coworking peers to achieve innovation
to some extent. The major portion of coworking startups has a good
amount of human capital, implying at least some degree of absorptive
capacity (Vinding, 2006). Looking at absorptive capacity as an enabler
to an open innovation system, the open innovation evaluation frame-
work is relevant to our investigated startups. Besides, startups found
CWS as facilitators for generating their innovation; however, it seems
that the amount of open innovation does not significantly occur as the
result of activities in CWS. Coworking startups also do not rely strongly
upon intellectual property protection mechanisms, which differs from the
standard requirements of an open innovation system.
RQ2: What Is the Role of Coworking Spaces in Fostering

Open Innovation in Digital Startups?
By interviewing nine entrepreneurs (aliased I1–I9) as post-survey follow-
up action, we obtained a better understanding of the role of CWS in
fostering open innovation. The entrepreneurs’ perception of the impacts
of CWS on four pillars of open innovation indicators is summarized in
Table 7.3.
Pillar 1: Knowledge and Technology Sourcing

Product research and development is observed as the activity where most
entrepreneurs could put open innovation in practice. I3 reported that the
CWS has an impact on his firm’s internal innovation: “[the coworking
space] is really important in developing my product, since it gives me
the opportunity to test it at events organized on purpose.” I8 explicitly
reported his innovation activity being influenced by the CWS, as he gets
the chance to discuss ideas with other startup founders. Moreover, I7
said: “We got the inspiration for trying new business models, we relied
heavily on the comments people made to us.” In these cases, the place
Table 7.3 The impact of coworking spaces on different indicators of open

innovation
Int. Pillar 1 Pillar 2 Pillar 3 Pillar 4
I1 no yes yes yes

I2 no yes no no
I3 yes yes no no
I4 N/A N/A N/A N/A
I5 No yes no no
I6 N/A N/A N/A N/A
I7 yes yes yes no
I8 yes yes no yes
I9 no yes no no
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dimension is important in sparking such communication. However,
I7 and I8 worked in the same CWS, and they spoke about a commu-
nity meeting happening once a month, where new members can ask for
suggestions about their projects. Some of the insights they used to innov-
ating their products emerged during this event.
I4, a CWS manager, reported: “There are some guys here working on a
podcast, using technical tools they’ve never used before: for them it’s innov-
ation, and this wouldn’t have happened if they weren’t here together.”
In this example, the presence of a permanent, ideal platform consisting
of the dimensions of place and space is key in fostering the innovative
behaviors mentioned. Alternatively, the mix between a common place
where people interact with each other and a figurative community where
they are located in cognitive proximity (where cognitive proximity is
characterized by technical competences in the broadcasting sector that
these people have in common) gives rise to a project dimension, which
displays a certain degree of innovativeness.
I3 enthusiastically mentioned how he got the chance to develop a
digital version of his product: “I created a graphical illustration of [the
product] to be used digitally and these guys developed it along with 8
students. We didn’t try it on the market, but it’s extremely interesting.
I got more experienced with young people’s customer experience.” He
also added: “A friend of mine is an expert about crowdfunding and he
came to [an event held weekly]. We started a crowdfunding project for
[a product] and I asked the people in [the coworking space] to help us
design the campaign: nine people accepted and gathered together for an
hour of brainstorming.” These are clear examples of innovation origin-
ating out of the scope of the company’s internal research and develop-
ment activity, which consequently can be classified as open innovation
behaviors. An event stimulated creativity and cooperation in the latter
case, while it is not clear how the first project was ignited. Surely, being
in the same place was a necessary condition.
To sum up, all of the four dimensions of CWS, namely place, space,
project, and event, are involved equally in fostering cooperation and open
innovation practices among coworking startups, which, in turn, translate
into a large set of innovative activities undertaken (i.e. the knowledge
and technology sourcing process). The platform consisting of places and
spaces gives people the chance to relate to each other in synergy. Events
seem to act as connectors, and to play a relevant role in bringing people
to interact. Projects are the final result of the process when open innov-
ation can ultimately be observed.
Pillar 2: Sources of Knowledge

Consultants, students, peer entrepreneurs in CWS are found to be sig-
nificant sources of knowledge. The collaboration between entrepreneurs
and these stakeholders relies on the place and event dimensions of CWS.
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Consultants were found to be easily accessible to companies in many
CWS. Many interviewees noted that Innovasjon Norge’s representatives
visit CWS on a regular basis and that they are available to answer
questions and to help people solve problems. Innovasjon Norge performs
a free consultancy service directed to coworkers, which said benefitting
from it in terms of innovation. The place dimension is clearly the enab-
ling mechanism here: entrepreneurs get access to free consultancy just by
being there.
Students are believed to be a potential source of innovation, and while
no evidence of current cooperation among coworkers and students was
collected, it was observed how CWS members put an effort in developing
connections with universities. I6, for instance, stated: “We have 3 or 4
student-startups in Grunder Hub right now. As a student you might have
a lot to talk about with a 60 years old guy. It’s difficult for this kind of
interaction to take place in a context different from a coworking space, a
place where everybody is equal.” A similar mentality was observed in I7’s
thought: “I have thought of having my own events, to involve a university
community into my company. This could benefit both my company with
more visibility and get students to meet companies.” In the former case,
a project is where innovation is thought to stem from, while in the latter,
an event makes it possible to open a new link with the university.
Coworking companies sometimes become each other’s customers
and suppliers because of the easiness of connecting to each other and
were found to cooperate in a number of cases. Also, several interviewees
mentioned cooperation with other companies without specifying the rela-
tionship they have with them.
The place dimension gives access to many sources of innovation, just
by sitting in the CWS. Again, in many instances, events have the power
to get people to know each other’s competences better and to foster their
cooperation through the place later on.
Pillar 3: Human Capital

As shown in Table 7.3, only I1 and I7 report about the acquirement or
improvement of human capital in their startups thanks to the CWS. It
seems that early stage digital startups have developed their core com-
petence before or outside the coworking environment. However, in a
few cases, coworkers admitted they had the chance to learn something
new thanks to their workplace. I1, for example, said: “It is very good
to discuss personal challenges, to have someone to share it with who
understands you.” Later on in the interview, she added: “In my office
right now there are a lot of people who are professional story-tellers,
show makers, which are close to my business, a lot of companies facing
the same challenges, and you can learn a lot just by talking to people.”
Other digital entrepreneurs mentioned the fact that they see an improve-
ment in their soft skills thanks to the CWS, through events and other social
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Table 7.4 The coworking space elements that matters
Coworking space elements Open innovation pillars
Place, Space, Event, Project Knowledge and technology sourcing

Place, Event Source of knowledge
Project, Event Human capital
gathering occasions. As I1 mentioned, she could acquire new knowledge

from her industry peers, so a space dimension is evident. Events help
entrepreneurs develop their soft skills, although they do not contribute to
the process of absorptive capacity building.
It is interesting to notice that I1 expressed her appreciation in terms of
learning opportunities for her CWS, which is specialized in her industry.
The fact that she reports the possibility to improve her skills might well
indicate that more focused CWS foster specific knowledge creation, aside
from soft skills development and networking. I1 underlined this fact: “In
my previous coworking space I couldn’t really get much, because they
were all so different. I don’t see a lot of value in very diverse coworking
spaces beyond the social aspect and networking.”
Intellectual property protection is the least visible element in CWS con-
text. One reason could be that the interviewed entrepreneurs are running
small and young businesses that do not make the extensive use of IP pro-
tection tools yet. These findings are in accordance with the survey data,
which displayed a low usage of such mechanisms by coworking com-
panies. Nevertheless, some examples were found. I8 reported meeting a
specialized lawyer at his CWS. The lawyer was presenting his company
during an event, and was thereafter that, for talking to people. I8 applied
for a patent with the help of this law firm. I1 said that legal services are
available once a month, free of charge, at her CWS. In the former case, an
event stimulated the use of IP protection mechanism, while in the latter
instance, the place dimension is important, because, again, I1 got free
legal services just by being there. The summary of important CWS elem-
ents is given in Table 7.4.
Taking Away –the Importance of Events

According to the opinions of digital entrepreneurs and managers of CWS,
a mere common place does not foster cooperation and consequently open
innovation among people. To translate this within the four elements of
CWS, the place dimension alone does not generate a project dimension
by itself; a space needs to be generated for people to interact in cogni-
tive proximity and a catalyst needs to push the origin of it. A catalyst
is a person that knows coworkers and how to connect them and it is a
necessary figure in a CWS. Most importantly for the sake of this research,
the best tool that a catalyst can utilize is an event. Therefore, the event
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dimension turns out to be crucial in promoting open innovation practices
among coworkers. An event creates trust and synergy among people: it
generates a space. The presence of the space improves the use of the place
dimension from mere geographical proximity to cognitive proximity. The
space dimension adds value to the place. Spaces and places together foster
interaction among people and ultimately their projects.
To sum up and to answer RQ2, the CWS plays an important role in
fostering open innovation practices, as long as a catalyst puts an effort
into building a community and connecting people with the help of events.
An event sparks connection among people, allowing places, spaces, and
projects to exercise their influence on the pillars of open innovation, as
illustrated.
Discussions
The Refined Model of Open Innovation in Coworking Spaces

Understanding the role CWS play in supporting open innovation practices
among digital startups leads to a refinement of our initial theoretical
framework. Our proposed model on OICS is shown in Figure 7.1. The
OICS model presents the different roles of CWS in connections to the four
pillars of open innovations. In the first part of the model, places, spaces,
events, and projects affect differently the four pillars of open innovation.
More importantly, we believe that events have an influence more on the
development of the other CWS dimensions, rather than directly on the
four pillars, and this is shown in the model. The arrows between events
and the other dimensions explain the influence in detail:
• Events give the chance to people to connect. Members get to know

each other better, and exchange mutual information about each
other’s business. The space is generated.
• A common place with no mutual interaction and synergies is of low
value. Places acquire value thanks to the generation of spaces.
• Events enable projects as they put people together. Also, the inter-
action between places and spaces allows more collaboration and con-
sequently contributes to the rise of joint projects.
In the second part of OICS, we observe the central position of know-

ledge and technology sourcing as an open innovation indicator. While
places and spaces are necessary conditions for startups developing their
innovative products or services, common projects are the main context
of open innovation with knowledge and information going beyond the
boundary of the startups themselves. Common projects also facilitate
the (partial) acquisitions of competences or skills in the shared places.
Intellectual property protection, as described before, does not play a sig-
nificant role in the model as a consequent factor.
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This research’s main focus was on the role of CWS in fostering open
innovation in a digital startups context. While Lee et al. (2010) acknow-
ledge the necessity of a network for open innovation practices to be in
place, they do not explain the process that brings to the creation of the
network. This work proposes a theoretical model that explains how
different elements of CWS contribute to the rise of open innovations
practices.
This chapter fills the gap by illustrating the role of events. Capdevila
(2013) compares CWS to industrial clusters, by recognizing a number of
common aspects. However, only one out of four CWS where interviews
were conducted displayed a degree of specialization throughout the
whole shared office and could therefore be included in Capdevila’s defin-
ition. Nevertheless, specialized knowledge was observed to some extent
in many CWS, and digital startups managers said they found it benefi-
cial for their business. Moreover, the interviewee sitting in the specialized
CWS reported preferring such a setting over diverse environments
experienced before, since much more valuable cooperation can arise with
people working in the same sector. Hence, it is believed that homoge-
neous shared offices can add value in terms of collaborative endeavors,
but the analogy between CWS and microclusters seems to be applicable
to a few cases. After all, this is an obvious consequence of the fact that a
large majority of CWS are small and young startups themselves. Targeting
only a small specific group of workers can be very risky in such a situ-
ation: for the sake of financial statements, managers are forced to accept
anyone willing to join the CWS, and specialization is a rare occurrence. In
contrast, diversity was reported as positive by many other interviewees,
confirming the view of Johns and Gratton (2013). Therefore, it can be
inferred that, although in different ways, both diverse and homogeneous
Source of
Places
knowledge
to
e
lu
va
d
ad
Human capital
enable
Events Projects
Knowledge and
m
ak
e
technology
us
e
sourcing
of
Spaces
Figure 7.1 The OICS model on Open Innovation in Coworking Spaces.

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CWS have the potential to foster collaboration and consequently open
innovation practices.
Implications for Sharing Economy

The financial crisis has possibly played a role in stimulating the coworking
phenomenon: sitting in a CWS helps saving money, and workers might
have chosen this solution over other workplaces in an attempt to save on
key resources during the economic downturn. The spread of open innov-
ation was recognized more recently but also became a global phenom-
enon across various industries. Companies often find it more convenient
to undertake joint projects for innovation, knowing that all the actors
active in the project will gain their share of value.
Both phenomena are perfectly aligned with the sharing economy
ideology, whereby coworking as well as open innovation represent an aid
to entrepreneurs struggling to conduct business with resource constraints.
This is especially true for digital startups that don’t need much room
for assets, but most of the time only need a place to sit and work, just
as a CWS can offer. Moreover, as long as safety precautions are taken,
the authors invite entrepreneurs to consider such alternative office
arrangements during these harsh times of crisis brought up by the cor-
onavirus outbreak, which is forcing a number of companies to cut on
resources.
Conclusions
The hype around the coworking movement has mounted considerably
throughout the last decade without signs of deceleration. The academic
literature had thus far neglected the link between open innovation and
CWS. This work aims at filling this gap, positions itself as one of the first
research work exploring the empirical connection between open innov-
ation and CWS. The results have shown that CWS have the potential
to foster open innovation practices among their members. The role of
events and similar initiatives is important in shaping a community. Two
of the studied open innovation dimensions are majorly influenced by the
role of CWS, namely knowledge and technology sourcing and sources of
knowledge. On the other hand, human capital and intellectual property
protection are not affected as much.
CWS managers and companies can find much useful information in
this chapter. More awareness is raised about the relationship between
coworking and open innovation. This study helps companies decide on
their corporate policies in terms of working arrangements and innovation
practices and it advises managers on how to improve internal cooper-
ation among coworkers. In particular, the study highlights the benefits
CWS offer to startups active in the digital sector, promoting them as an
ideal location to conduct day-to-day business. Digital entrepreneurs are
3
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1

invited to consider such an arrangement, in case they are looking for
meaningful connections and successful cooperation.
Many aspects were not considered within this study, leaving room
for further development of the topic, while tracing a possible pattern
for a literature flow. Future research on this theme should consider the
suggestions proposed herein.
Notes
https://ec.europa.eu/eurostat/web/microdata/community-innovation-survey
1
2 https://www.innovasjonnorge.no/
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8
Gigging with an MBA
When Elite Workers Join the
“Gig Economy for Finance People”
Alexandrea J. Ravenelle, Erica Janko,
and Ken Cai Kowalski
Gigging with an MBA: When Elite Workers Join the

“Gig Economy for Finance People”
As professional work has become more precarious during the 21st cen-
tury (Styhre, 2017), highly skilled workers have been working more
and more in self- employment relationships (Barley & Kunda, 2011;
Osnowitz, 2006). Yet, while gig platforms such as Uber and TaskRabbit
have become household names, little is known about their higher status,
but equally digital counterparts. Often described as “the gig economy
meets McKinsey,” a slew of online platforms have recently arisen that
promise elite workers the same opportunity for “flexibility” and to be
their “own boss,” with the added benefit of a $1,000/day minimum
wage. Whereas many gig economy services have been criticized for out-
sourcing risk to workers (Ravenelle, 2017; Ravenelle, 2019; Rosenblat,
2018), high-status services may reduce the risk experienced by potential
entrepreneurs by allowing them to discreetly launch online consulting
businesses within a password-protected marketplace. As a result, workers
can “test drive” entrepreneurship without quitting their day jobs.
Yet, while the high daily wages are promising, and the work is highly
professionalized, with the workers engaged in offices rather than working
behind closed doors in private homes, workers still experience a high
level of risk including slow periods, income uncertainty, and the constant
need to market themselves. The question arises: Why are well-educated
workers with prestigious work experience turning to platform-based gig
work, however exclusive? We ask, do high-status platforms serve as a
stepping stone for elite workers to enter entrepreneurship, or do these
services simply enable workers to engage in digital moonlighting?
In this chapter, based on surveys and in-depth interviews with 35 elite
gig workers, we find that many workers identify themselves as being
entrepreneurial or having an entrepreneurial spirit, and the majority have
incorporated, but entrepreneurship tends to be a secondary interest when
it comes to their platform-based work. Instead, for most workers, the
appeal of gig-based work falls into one of four categories: New Money;
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146 Alexandrea J. Ravenelle et al.

Needed & Necessary; Networkers; and New Occupation. While some
workers identified their platform-based gig work as a way to “test”
consulting and as a “warm-up to entrepreneurship,” few saw their gig
platform work as a direct on-ramp to becoming an entrepreneur.
The Future of Work and Push/Pull of Entrepreneurship

The rapid expansion of the gig economy has largely been driven by
the explosive growth of on-demand app platforms such as Uber, Lyft,
TaskRabbit, Airbnb, and Instacart. In 2010, on-demand platforms col-
lectively attracted $57 million in venture capital investment. By 2017,
Uber alone pulled in $12 billion (Prassl, 2018, p. 18). With the con-
tinual improvement of digital technologies that enable remote labor,
firms outside the tech sector are also finding that hiring freelance labor
is more cost-effective than retaining full-time employees in conventional
workspaces (Ryder, 2019). The embrace of contingent labor threatens to
reproduce many of the working conditions that characterized early indus-
trial capitalism, including piece-work compensation and the devolution
of financial risk from firms to workers (Ravenelle, 2019; Stanford, 2017).
These concerns are further exacerbated by expected job losses and other
major economic disruptions due to labor automation (Ford, 2015; Lent,
2018), culminating in a general shift away from stable employment that
some observers have termed the “fourth industrial revolution” (Hirschi,
2018; Neufeind et al., 2018; Schwab, 2018).
The decreasing role of stable employment further leads to a “risk
society” in which “social institutions provide less ‘insurance’ against the
vicissitudes of life, such as job loss or loss of one’s health, and individuals
are expected to assume responsibility to navigate these risks” (Marshall
& Bengtson, 2011, p. 24). Workers are told that they are responsible for
their own careers, and urged to improve their value and marketability
through such activities as job crafting (Wrzesniewski & Dutton, 2001)
or personal branding (Gershon, 2017; Vallas & Cummins, 2015). This
focus on identifying opportunity, marketing one’s self, and being able
to survive the vicissitudes of work and insecurity is a small step away
from the risks and challenges typically associated with entrepreneurship
(Stevenson & Gumpert, 1985).
Draws to entrepreneurship are often characterized as “pushes” into
necessity entrepreneurship or “pulls” into opportunity entrepreneur-
ship (Amit & Muller, 1995; Giacomin et al., 2011; Kirzner, 1979; van
der Zwan et al., 2016). Young, wealthy men with proactive, optimistic
attitudes are more likely to be opportunity entrepreneurs, while neces-
sity entrepreneurs are often motivated by negative experiences in current
or past employment and may have less privileged backgrounds (van
der Zwan et al., 2016). Pull entrepreneurs are more likely to be finan-
cially successful and remain self-employed for longer periods than push
entrepreneurs (Amit & Muller, 1995; Block & Sander, 2009), though
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Gigging with an MBA 147

recent work contradicts this trend (Rocha et al., 2015), suggesting the
need for further research. Pull factors into opportunity entrepreneurship
are often positive, with these entrepreneurs seeking intrinsic rewards (e.g.
recognition, innovation, and independence), pursuing financial success,
or following the path of a family member or role model (Amit & Muller,
1995; Carsrud & Brännback, 2011; van der Zwan et al., 2016). Push
factors into necessity entrepreneurship are of a darker nature.
In countries with high economic inequality people are more likely to
enter into entrepreneurship (Auguste, 2020), but human and financial
capital become weaker deterrents for entry into necessity entrepreneur-
ship, while financial capital predicts entry into opportunity entrepreneur-
ship (Xavier-Oliveira et al., 2015). In the U.S., human capital, particularly
the advanced education and managerial experience associated with elite
occupations, is strongly associated with entry into entrepreneurship (Kim
et al., 2006).
The unemployed often pursue entrepreneurship, the “unemployment
push” or “escape from unemployment” effect, because it may feel like less
of a risk than having no job at all (Thurik et al., 2008; van der Zwan et al.,
2016). Family pressure or job dissatisfaction may also push people into
entrepreneurship, as well as traits that may make it difficult for people to
find employment, like criminal background (Amit & Muller, 1995; Hwang
& Phillips, 2020; van der Zwan et al., 2016). The boundary between
opportunity and necessity entrepreneurship is, of course, not rigid, and
recent work points to a group of entrepreneurs that fall between these
categories (Giacomin et al., 2011). For example, hybrid entrepreneurs,
particularly in knowledge-intensive fields, may choose to engage in entre-
preneurial moonlighting while keeping their primary jobs, before entering
into self-employment (Folta et al., 2009). The question then arises, are
workers using elite gig platforms to begin preliminary forays into entre-
preneurship, or is this simply seen as digital moonlighting?
Exclusive Platforms and Defining Elite Gig Workers

Elite platforms such as Graphite (formerly known as SpareHire),
Catalant (previously called HourlyNerd), and TopTal describe themselves
as offering “top business talent” and “on-demand experts.” Graphite
markets itself as offering access to “6,000 vetted independent experts,”
more than 800 of whom have big-three consulting experience (Bain,
McKinsey, and BCG), and 65% with advanced degrees, including more
than 1,600 with an MBA from a top ten business school (Our experts,
n.d.). Its competitor, Catalant, offers access to more than “70,000 inde-
pendent experts” used by “more than 30% of the Fortune 100… to
power strategic plan execution, enterprise portfolio management, centers
of excellence, organizational redesigns… and post-merger integrations”
(What we do, n.d.). While these services are not household names, they
are becoming increasingly entrenched in corporate America.
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Unlike lower status gig platforms, such as TaskRabbit, the personal
assistant site, or Instacart, the grocery shopping platform, high-status
platforms market themselves as exclusive enclaves for talent. TopTal,
a portmanteau of Top and Talent, puts potential gig workers through
a three-to five-week application process before accepting only 3% of
applicants. Workers are screened for “language and personality,” before
undergoing a two-step knowledge and skill screening, completing a test
project and being required to exhibit “continued excellence” (Why 3%?,
n.d.). Graphite notes that only 10% of applications are accepted and that
workers “deliver great outcomes with an average rating of 4.8 out of 5
stars,” with those who fall short being “immediately removed from the
network” (Frequently asked questions, n.d.).
While the workers themselves fit the sociological definition of elites as
“those with vastly disproportionate control over or access to a resource”
(Khan, 2012) due to their incomes or education levels, we focus our cat-
egorization on the work itself. We define elite gig work as paying at least
$100 an hour, and including the type of work that is usually considered
high prestige and highly lucrative such as management consulting, stra-
tegic planning, and financial services. These are the types of jobs that
top business school graduates traditionally compete for, and yet, they
are now available via gig platform, albeit on an independent contractor
status and without any workplace benefits, protections, or opportunities
for advancement.
Research Methodology
The 35 respondents for this study were recruited from the Graphite,
Catalant, and TopTal platforms and participation was limited to workers
who had at least one completed, and reviewed, project on their respective
platform. Each participant completed a short demographic survey before
being interviewed in a participant- directed semi- structured interview
(Weiss, 1995). Interviews were conducted between June 2019 and March
2020, with most conducted in person. Interviews focused on open-
ended questions: how workers became involved with the high- status
gig economy; the challenges they encountered in engaging in consulting
work; their views on the gig economy and entrepreneurship; if they iden-
tify as entrepreneurs; and their views on the future of work.
All interviews were audio-recorded, transcribed, and coded by question
(Deterding & Waters, 2018) before being coded inductively and analyzed
for patterns. Demographic information from the surveys was entered into
a spreadsheet and analyzed via descriptive statistics. To preserve confi-
dentiality, all respondents were assigned pseudonyms. To encourage par-
ticipation in the study, workers were given a $50 gift card incentive and
offered lunch during the course of the interview.
Participants included 25 males and 10 females, ranging from 25 to 66
with an average age of 40. Twenty-five participants identified as white,
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six as Asian, one as Hispanic, one as racially mixed and one as American.
Their household incomes were high: 28 had an income of more than
$100,000, including 16 with household incomes north of $200,000 and
only two had incomes below $99,999. Twenty-four identified themselves
as having a graduate degree, including two participants with doctorates
and one with a law degree. The remainder had college degrees.
Findings
New Money: “A Gig Economy for Finance People”

First and foremost, the main reason that workers give for turning to the
platforms is financial, an explanation we call “New Money.” For these
workers, gig platform work was seen as relatively easy to access within
a short time period, unlike obtaining a full-time job. This is in line with
Ravenelle (2017) where many workers identified their involvement in the
sharing economy as being driven by the need to “sell” services or access
to spaces (via Airbnb) as opposed to “share” resources. Many of the high-
status gig workers described themselves as finding the elite platforms by
searching online for opportunities to make money. For instance, Seth,
36, left his position in a top three management consulting firm, without
a “firm plan” as to his next career move. After several months, he needed
“work to pay my mortgage and so I just Googled freelance work and
Sparehire was the first one that I found. And there were a couple of
projects that I was right for. So I submitted and I got those projects and
I started earning money from it on. So I thought, ‘that’s great.’ ” Likewise,
Adalene, 30, noted that she turned to Catalant for work when she ran out
of money while starting her own company.
In addition to providing a new source of income, the platforms also
enabled workers to group themselves as part of a new way of working,
i.e. within the gig economy, as explained by Donald, 55. “I was working
at a hedge fund and I left the fund, and was just trying to kind of figure
out, you know, my next step. And actually I must’ve Googled it. I was
like, I think I was just Googling. I just stumbled on it and I was like,
I guess my initial thought was there’s a gig economy for everyone else.
There has to be a gig economy for finance people.” Donald’s confidence
that there must “be a gig economy for finance people” is illustrative of the
sheer prevalence of gig platforms and the attention paid to the so-called
“future of work” as involving remote and independent contractor work
and the expected rise of the freelancer class (Horowitz et al., 2005).
Needed and Necessary: “Why am I putting up with this?”

A closely linked category to New Money were those workers who viewed
platform-based gig work as Needed and Necessary. For these workers,
gig work was seen as a necessity after a bad work experience or as an
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alternative to long-term unemployment. While these workers were also
using gig work as a source of income, they often framed the gig work
as needed due to a reluctance to return to full-time employment after
a “career catastrophe” or negative experiences, partnered with the
challenge of finding additional sources of work:
I came out of grad school, went to [a major consulting firm], left and
went to a startup and then… I got fired from the startup for an equal
pay dispute. And I had left [the consulting firm] for whistle blowing
on gender discrimination… But at that point I had sort of just had
enough with trying to deal with the institutions. And I remember
thinking all the time, like, why am I putting up with this bullshit? –
Olivia, 33
I got involved to be honest, actually, after kind of a career catas-
trophe, I was fired from my prior job. And after two years of not
being promoted, and it was all long, dramatic history to it –I realized
very late that was probably because I complained about sexual har-
assment a long time ago… And what I realized is that I had not –
well, there was still some psychological issues, you know, based on
how it ended but also, I realized that I just didn’t know how to sell. –
Anastasia, 41
While Anastasia turned to the platforms for work, due a lack of know-
ledge about how to sell, she and her consulting partner regularly refer
to themselves as “refugees” from the corporate world after they each
experienced a series of career mismatches. Their gig-based work, while
it has not always been especially lucrative, is seen as “offering more con-
trol” over their work environment, while the short-term nature of the
projects allows for a “light at the end of the tunnel” if a consulting rela-
tionship sours.
Also included in the Needed and Necessary classification are workers
who turned to elite gig work after an extended period of unemployment.
Moulton and Scott (2016) found that for older workers especially, job
loss is strongly associated with entry into self-employment. Drawing on
Kalleberg (2011), Moulton and Scott note that older workers engaged in
more knowledge-based, entrepreneurial forms of self-employment have
greater levels of wealth, income, and education and are more likely to
be white non-Hispanic men. This more privileged group fills the “good
jobs” of self-employment (Moulton & Scott, 2016), which includes
elite gig work. For instance, Craig, 48, a former equity research analyst,
turned to platform-based gig work also after getting laid off several times
and experiencing a long period of unemployment:
I couldn’t find a research job, so I was doing everything I could. I was

trying everything. I applied to Starbucks, applied to Blockbuster,
couldn’t apply to sell mobile phones. I couldn’t get any, any type of
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job…. Eventually I think SpareHire was created to take advantage of
all these out of –these unutilized workers like myself. And so I guess
shortly after they started up, I noticed them because I was always
searching for stuff. And I applied and I got in and I got my first job
shortly thereafter.
The work that Craig found through the platforms would fit many
definitions of an enviable, professional job: well-paid and offering weekly
business class travel with stays in well-appointed hotels. Yet, when he
was interviewed in the summer of 2019, Craig hadn’t secured any add-
itional consulting engagements in more than six months. “I apply to jobs
every few days. And it’s really like winning a lottery ticket because it’s
really hard to understand what a client’s looking for. And a lot of times
in this gig economy, the clients themselves don’t even know what they’re
looking for. They’ll get like 30 or 40 applications and unless –in their
mind –you fit a certain bucket, they won’t talk to you.”
Craig’s comment illustrates one of the challenges that gig workers face,
even those engaged in elite work: while gig platforms are often described
as offering services “on-demand” for clients, it’s a lopsided equation for
workers who may struggle to get work when they want –or need –it.
Yet, while the elite platforms don’t always deliver when it comes to a
dependable source of work, or income, many workers found that the sites
offered strong opportunities for networking as the next section will show.
Networking: “Expand at least the reach of what we’re doing….

Put our profiles out there”
Granovetter (1973) foundationally laid out the importance of broad
networks, with weak ties among many people, in securing new jobs.
Weak ties enhance people’s opportunity for mobility by allowing them
to connect to openings with new employers. In addition, when people
accept a new job, they further broaden their networks by bridging the
networks of weak ties among their new and old employers (Granovetter,
1973). Today, workers must consciously broaden their skills, knowledge,
and networks to be able to secure work (Smith, 2010). Workers’ access
to networks and network-based referrals impacts their career trajectories
and career turbulence, leading to more stable careers for those who are
connected to less clustered, more widespread networks (Fountain &
Stovel, 2014). In particular, freelancers may engage in career-related net-
work behavior to increase their career satisfaction and perceived future
career opportunities (Jacobs et al., 2019).
While workers sometimes differed in their assessment of the financial
opportunities offered by gig platform work, many viewed the platforms
as offering a strong opportunity for networking and the development of
weak ties. For instance, Dennis, a 66-year-old banker, had traditionally
relied on referrals from estate lawyers. In his 30s, it was beneficial to know
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older, more established attorneys. But as he aged, so did his referrals. “All
those lawyers who’ve been referring to me,” he explained. “I mean a lot
of them are dead and most of them are retired because you tend not to
know the ones that are younger than you.” For Dennis, the platforms lit-
erally provided a way to access fresh contacts. Manish, 34, also described
the platforms as a way to access new sources of work after exhausting his
LinkedIn contacts and those of his consulting partner. Describing himself
as “relatively gregarious for a data analyst,” he noted, “There is a limit to
that even in my work. So we were like, ‘this is a good way for us to expand
at least the reach of what we’re doing.’ …Put our profiles out there.”
Unlike traditional networking events that are often seen as primarily
attracting sales people and the unemployed, the platforms offered workers
the opportunity to interact with individuals who were strategically placed
in powerful –or simply more powerful –positions than their own, and
provided the opportunity to increase their social capital (Lin et al., 2016;
Sprengers et al., 1988). The platforms’ entrenchment within corporate
America, and the coverture of their perceived exclusivity, provided
opportunities that workers could not access individually. As Bret, 37,
explained, the online platforms “provide new opportunities with poten-
tial clients that I don’t yet have access to.” Other workers echoed the
perception that work was often relationship-based and that the platforms
provided the weak ties necessary (Granovetter, 1973). As a consultant,
Olivia noted, “I wouldn’t have access to this work otherwise cause I don’t
have those relationships.”
The networking opportunities, and access to people in powerful
positions, were seen as such an asset that John, a single family office
banker, had the blessing of his company to work part-time on his gig-
based consulting work, ostensibly because it benefitted his job: “I’ve
sourced deals for our portfolio out of it. I’ve avoided mistakes and just
have a broader expert network to these people that I would never come
in contact within my normal life,” he said. “Whether it’s people having
specific things in different states that I have no reason to come across…
So that’s where the intelligence and networking comes in.”
The networking aspect of this gig work, in addition to the variety
of work posted, also led to some workers viewing the platforms as an
opportunity to reinvent themselves or pivot into a new career or field, as
the next section will illustrate.
New Career/Pivot: “It wasn’t as easy as changing roles in my 20s”

While most workers turn to gig work for financial or networking reasons,
others saw the platforms as offering an option to try out a new line of
work or even test drive their ability to venture out on their own. This
is similar to work by Panos et al. (2014), which found that in the U.K.,
workers may hold multiple jobs to gain skills and transition careers or
enter into self-employment.
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Neil, 34, saw gig work as a solution to a career that wasn’t as “delib-
erate” as he had hoped. While he started a position in a private equity
firm immediately after college and then moved to an investment bank for
several years, his work was primarily in the back office, which is typic-
ally viewed as secondary to the actual bankers (Ho, 2009). After taking
a multi-month vacation, Neil began looking for work again only to have
countless recruiters try to place him in the same job he’d had before,
just with a different firm. A colleague suggested that he try the online
platforms to expand his resume while figuring out his next step:
It’s going well. It’s sort of had the exact desired effect that I was
hoping for. Again, it’s making a pivot, I guess. I have 12 years of pro-
fessional experience since school. I quickly realized that it wasn’t as
easy as changing roles in my 20s. People see that you’ve been doing
something for 10 or 12 years and they say, “All right, well you’re
going to keep doing that.” Unless you go back to business school,
there’s really no way to reset that, or it’s very difficult at least….
While gig work can be used to reset one’s career or gain needed experi-
ence in a new industry or occupation, such a strategy is not without risks.
Recent scholarship suggests that engaging in freelance work between jobs
can negatively impact workers’ chances of securing future full-time employ-
ment (Mai, 2020). While Neil chose gig work as an alternative to going to
business school in order to ‘reset’ his career, for other workers, gig work
was seen as an additional tool for career switching that could be used in
conjunction with their education (Table 8.1). As Manish, 34, explains, “I
was a career switcher, so I was looking to go into not only a field that I had
no experience in, but also a job function I had no experience in, so I was
looking to at least bolster one of those, so I started looking on HourlyNerd.”
Potential Entrepreneurship: “One foot out the door”

While numerous surveys have found strong support for entrepreneur-
ship and self-employment (Aldrich & Yang, 2012; Fairlie & Holleran,
2012; Kelley et al., 2011), the elite gig workers participating in this study
did not identify entrepreneurship as their primary goal for joining the
platforms. Indeed, only a distinct minority of participants viewed the
platforms as an opportunity to test out entrepreneurship, or working
independently. Mark, 49, described himself as joining the elite platforms
because he “was toying around with consulting,” and had a varied back-
ground that could lend itself to working in various fields. In addition
to the potential to earn money and network, the platforms were seen
offering a way to ease into uncertainty. As Brandon, 25 noted, “To me,
it’s kind of like one foot out the door, maybe even a challenge just to
kind of get a feel for the water.” But even for those who viewed the work
as potentially offering an opportunity for entrepreneurship often didn’t
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Table 8.1 Key categories of worker interest in elite gig work
New Money: A relatively easy Needed “work to pay my mortgage and so

to access within a short I just Googled freelance work and Sparehire
time period income, unlike was the first one that I found. And there
obtaining a full-time job; also were a couple of projects that I was right
a way to join a “new” way of for. So I submitted and I got those projects
working and I started earning money from it on. So
I thought, ‘that’s great.’ ” –Seth, 36
Needed & Necessary: A “I got involved to be honest, actually, after
necessity after a bad work kind of a career catastrophe, I was fired from
experience or as an my prior job… Also, I realized that I just
alternative to long-term didn’t know how to sell.” –Anastasia, 41
unemployment
Networkers: A strong “All those lawyers who’ve been referring to
opportunity for networking me… a lot of them are dead and most of
and the development of weak them are retired because you tend not to
ties know the ones that are younger than you.” –
Dennis, 66
New Occupation: An option to “I quickly realized that it wasn’t as easy as
try out a new line of work changing roles in my 20s… Unless you go
or test drive their ability to back to business school, there’s really no way
venture out on their own to reset that, or it’s very difficult at least….”
–Neil, 34
see it as the primary goal. When asked about making a career as an

independent consultant, Van, 34, explained, “I think it’s an interesting
optionality, I guess. It was in the back of my head like, ‘hey, if this thing
works, let’s test it out, see what happens.’ But that wasn’t the primary
objective or goal.”
One possibility for this entrepreneurial reticence may be because the
workers were often already engaged in elite occupations (management
consulting, banking, etc.) and therefore they didn’t view entrepreneur-
ship as offering a step “up” to an elevated social status (Aldrich & Yang,
2012; Mills, 1951). Another possibility is that the workers, many of
whom had MBAs, didn’t view their work as entrepreneurship unless it
fit a preconfigured heuristic of entrepreneurship (Aldrich & Yang, 2012).
For instance, workers may not view their work as entrepreneurship
unless they have established a wildly successful company that has hired
thousands and earned millions.
Conclusion
Gig work is marketed as bringing “entrepreneurship to the masses”
(Ravenelle, 2019), but gig workers also experience a high level of risk
including slow periods, income uncertainty, and the constant need to
market themselves. Given these challenges, we asked, why do elite workers
join gig platforms? Is this a stepping stone to allow gig workers to begin
entrepreneurial ventures, or simply a form of digital moonlighting?
51

Based on interviews and surveys with 35 elite gig workers, we find
that while many workers identify themselves as being entrepreneurial
or having an entrepreneurial spirit, and the majority have incorporated,
entrepreneurship tends to be a secondary interest when it comes to their
platform-based work. Rather than seeking a gentle on-ramp to entrepre-
neurship, the elite workers we interviewed turned to gig work after being
pushed out of a job, to fill a gap in employment, to supplement a full-time
job with additional income, or to pivot careers. Workers report stum-
bling onto these platforms when seeking ways to make money or look
for a job. Additionally, online consulting platforms replaced the expan-
sive social networks used by entrepreneurs to secure work that either
they could not risk mobilizing –because their connections were limited
or too closely tied to existing work –or they did not have. Some of our
respondents engaged in this work for a limited period, but for others gig
platforms became their career path, even if unintended. In short, while
some workers identified their platform-based gig work as a way to “test”
independent consulting and as a “get a feel for the water,” for most, the
appeal of gig-based work lies in the opportunity to earn new or needed
money, make new connections, and potentially pivot into a new career.
Although many of the participants described themselves as having entre-
preneurial spirit, or entrepreneurial interests, their gig platform work is more
often described as consulting or freelancing than entrepreneurship. The flex-
ible nature of the work, whereby it can be picked up on the side, or turned
to when one is between jobs, may enable gig work to be seen as less of an
identity and less of a commitment. As a result, these platforms may actu-
ally reduce interest in entrepreneurship by making it possible for workers
to engage in outside work –to scratch the proverbial entrepreneurial itch –
without fully committing to entrepreneurial business development.
While entrepreneurial itch-scratching may be beneficial for individuals
in the short term, there are two major risks: (1) workers may get “stuck”
in gig work; and (2) low-risk outside work may reduce entrepreneurial
desire and the establishment of new firms. Longitudinal research on low-
status gig workers notes that workers who turn to gig work later in life
may have a harder time transitioning back into stable non-gig-based
employment (Ravenelle, 2020); additional research is needed to see if
elite gig workers experience the same challenges. The risk of a reduction
in the establishment of new firms has larger social implications, including
impacting the creation of new jobs. Additional research on the career
decisions leading up to entrepreneurship, and elite workers’ perceived
deterrents in pursuing entrepreneurship, is needed.
Acknowledgments
This work/research was funded by the Ewing Marion Kauffman
Foundation. The contents of this publication are solely the responsibility
of Grantee. The authors also wish to thank Howard Aldrich and Arne
Kalleberg for their mentoring.
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9
Coworking Spaces in the Sharing
Economy
Examples from an Emerging Country
Ozge Kirezli and M.G. Serap Atakan
Introduction
The sharing economy model is a collaborative system that solves the
problem of the underutilisation of resources associated with the unequal
distribution of wealth and resources (Botsman & Rogers, 2010).
According to Kumar et al. (2018) the sharing economy is the monetisa-
tion of the underutilised assets of service providers through short-term
rental. The sharing of workplaces in coworking spaces aims to connect
corporations that have unused office spaces with those who need it,
tailoring office spaces and meeting rooms to the needs of the knowledge
worker renters, namely freelancers, creatives, lawyers, entrepreneurs, and
coders. There is a rising trend of more people working outside their trad-
itional offices and engaging in coworking by sharing office spaces (Cheah
& Ho, 2019).
Coworking is a collective, community based, new way of working
(Merkel, 2015). As an extension of the sharing economy (Botsman &
Rogers, 2010; DeGuzman & Tang, 2011), coworking is constantly
evolving to meet the office needs of autonomous workers (Brown, 2017).
Coworking spaces provide the opportunity for collaboration, commu-
nity, participation, and learning from each other. Rapid advances in tech-
nology, such as the internet of things (IoT), big data, mobile services,
social media, and online communities changed the importance and per-
ception of technology (European Commission, 2017) and facilitated the
evolution of businesses from physical to virtual spaces and also to shared
coworking spaces (Heinrichs, 2013; Ferrell et al., 2017; Ginoes & Brem,
2017; Ritter & Schanz, 2019).
This study aims to explore and describe the new form of the sharing
economy using the example of a sample of coworking spaces operating in
Turkey. It contributes to the emerging research on coworking spaces, by
attempting to present the benefits these coworking space providers offer
to their users. After providing the literature review on coworking spaces,
the authors introduce the findings of the qualitative study conducted with
the founders/cofounders of four selected coworking spaces. The conclu-
sion and implications of the study are also presented.
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Coworking Spaces in the Sharing Economy 161
Literature Review
Coworking Spaces: A New Model in the Sharing Economy

The sharing economy attracts the attention of both academicians and
practitioners. Sharing is a substitute for private ownership (Belk, 2007). In
their attempt to provide a strategic framework for the sharing economy,
Kumar et al. (2018) proposed a business model consisting of a firm or a
service enabler, acting as an intermediary between the service provider
who supplies the goods or services and the customers who demand those
underutilised goods and services.
Coworking is a new and rapidly expanding sharing economy activity.
The main idea of coworking spaces is to connect corporations that
have unused office space with those who need it, tailoring office space,
and meeting rooms to the needs of the users. It involves sharing phys-
ical workspaces and allows cooperation among independent knowledge
workers. Codagnone and Martens (2016) classify sharing platforms into
three categories: (a) the recirculation of goods (second hand and surplus
goods), (b) increased asset utilisation (production factor markets), and
(c) service and labour exchanges. As coworking spaces facilitate the recir-
culation of idle assets, vacant or underused spaces, and create new job
opportunities through networking, they are therefore associated with the
second and third categories.
Coworking spaces emerged as a response to the global crisis and new
employee needs. There are many successful global coworking space
practices. LiquidSpace, which is known as “the Airbnb of workspaces”,
brought collaborative consumption to the usage of office spaces and
meeting rooms. This application helps freelancers and others seeking
office space find workspaces tailored to their needs, time, and geographic
preferences. Any company that has excess capacity and those that have
capacity shortages can be matched through this application and thus can
fill unused resources and capacities (Matzler et al., 2015). Spacecubed
is another coworking space example from Western Australia. This ven-
ture facilitates the sharing of unused office space and brings digital
entrepreneurs together (Standing et al., 2016). A coworking space oper-
ating in the U.S., WeWork, aims to create a coworking space where the
individual who joins the coworking space as “me” becomes part of the
greater “we” (Spreitzer et al., 2015).
Coworking is more than access to space and facilities; it is the “working
alone and together” behaviour that attracts the attention of participants
(Spinuzzi, 2012; Capdevila, 2014). Coworking is characterised by the
inclination of highly skilled knowledge workers to physically gather in
some locations to take advantage of proximity and knowledge exchange.
In this way, coworking involves sharing both physical assets (office,
common spaces) and intangible assets (knowledge, skills) (Durante &
Turvani, 2018).
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162 Ozge Kirezli and M.G. Serap Atakan

In the late 2000s, three main trends have given rise to the coworking
system as a non-standard work system: self-employed creative know-
ledge work, the rise in independent work pursued at a flexible time and
place of work, and the rapid developments in mobile communication
technology. As mentioned by Moriset (2013), the globalised economy
and intensive competition led the industry to push the limits of creativity
and innovation, which, in turn, served as critical drivers of sustainable
economic growth. The global economic crisis even triggered the global
giants such as Deloitte, IBM, and Apple to reconsider their workplace
and liberate employees from their physical locations (Brown, 2017).
Moreover, digital technologies changed the geography and the way of
doing knowledge-based jobs. Nowadays creative people work on port-
able devices, notebook computers, and tablets, and benefit from access
to information through wireless and mobile telecommunications any-
time, anywhere. This means knowledge workers no longer need to work
in an office. Also known as digital nomads, they can create their own
office spaces outside of their home and office. Additionally, advances
in cloud storage and on-demand software also liberate employees from
offices. They can work from anywhere as long as devices are mobile
and versatile (Greenfield, 2006; Moriset, 2013). Thus, the presence of
open spaces, meeting rooms, relaxing areas for informal socialising of
freelancers, software experts, and designers led to an increase in the
usage of coworking spaces.
The coworking model creates interaction among people, spaces,
and technology (Pratt, 2002). Seen this way there exist two sides to the
coworking system: coworking users and coworking space providers.
Coworking space users are self- employed creative nomads, start- up
creators, entrepreneurs, travellers who use coworking spaces by sharing a
desk, and engaging in social and professional interaction (Spinuzzi, 2012;
Gandini, 2015). These people need well-connected workplaces and this is
what coworking spaces are providing them with. The offer of coworking
spaces is mainly the rental of office spaces. Users first rent a desk and then
may increase their involvement in the shared working environment and
use other facilities such as meeting rooms and conference spaces. Beyond
the office layout, coworking spaces also have an atmosphere, a spirit, and
can even reflect a lifestyle.
Coworking space providers have a specific business model consisting
of a firm or a service enabler which acts as an intermediary between the
service provider who supplies the goods or services and the customers
who demand those underutilised goods and services (Kumar et al., 2018).
In this manner, coworking space providers fill the gap in the sharing
economy model to better manage the skyrocketing fixed costs of office
space as well as providing a collaborative work environment. This new
kind of workplace is designed to host creative people and entrepreneurs
who endeavour to escape isolation and find an environment that advocates
meetings and collaboration (Moriset, 2013). These places are meeting,
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collaboration, discussion, and working places. As stated by Capdevila
(2013) coworking spaces allow the co-presence of professionals in the
same place, by sharing resources and leading to community building.
Benefits of Coworking Spaces

The rise of this new working trend can be traced through the rise of
either coworking space users or providers. According to the 2019 Global
Coworking Survey undertaken by Deskmag, by the end of 2019 glo-
bally, almost 2.2 million employees were projected to be working in over
22,000 coworking spaces. (Foertsch, 2019). This rapid change is directly
related to how the coworking system filled a gap by providing network
intermediation and physical spaces aided by the technological infrastruc-
ture for the business world (Capdevila, 2013).
As stated by Brachya and Collins (2016) during economic crises
people prioritise saving money and find ways of reducing expenditure.
Users’ tendencies to use underutilised resources at affordable prices pro-
vide economic value not only to customers but also to coworking space
providers (Benoit et al., 2017; Hwang & Griffiths, 2017). Office users
are willing to decrease costs, look for convenient and affordable offers
(Hamari et al., 2016), They are also looking for the financial freedom
afforded by sharing and renting office spaces rather than owning (Bardhi
& Eckhardt, 2012). Hughes et al. (2011) assert that these spaces allow
the users to lower their office rental costs, access better locations, and
engage in social interactions.
Coworking space providers offer technological support in three ways:
infrastructure, office equipment, and facilitating software. Technological
infrastructure includes the internet, wireless connection, call routing tech-
nology to direct calls to users, as well as mail, and fax handling (Bouncken
& Reuschl, 2018). Printers, fax devices, phones, other hardware such as
3D printers or scanners are the types of office equipment that can be
available to the users.
Coworking spaces facilitate the meeting of new people, finding new
friends, and increasing the interaction among users and the service
providers (Botsman & Rogers, 2010; Grybaitė & Stankevičienė, 2016).
Coworking systems help entrepreneurs create new networks within
societies, building trust whereby people feel like coworkers and even
neighbours (Grybaitė & Stankevičienė, 2016). This system enhances cap-
acity utilisation, collaboration, and forming of a community (Capdevila,
2013; Moriset, 2013; Gandini, 2015). Social relations are the main
factors in productivity across coworking spaces and in these collabora-
tive environments, freelancers meet other independent workers, and are
networking, socialising, and becoming part of a community (Gandini,
2015). The coworking system allows the exchange of views, encourages
learning from each other, and forming teams. The coworking space users
can develop social ties while learning from others on the digital platform
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in the form of “online communities” as well (Holzweber et al., 2015;
Vaskelainen & Piscicelli, 2018).
Coworking spaces are perceived as decreasing idle capacity, increasing
full utilisation of assets, prioritising accessing the necessary products and
services rather than owning them, and helping to extend the life cycle of
goods (Botsman & Rogers, 2010; Haase et al., 2011; Demaily & Novel,
2014). Consequently, highly digitalised coworking space providers stimu-
late the users or service providers to reassess their impact on the envir-
onment. Botsman and Rogers (2010) also state that through engaging
in sharing economy, users as well as service providers who share, rent,
swap, lend, or barter may feel they are fulfilling their obligations towards
the environment.
Concerning the benefits offered, coworking spaces are combining
the best parts of an office environment, namely community, collabor-
ation, and convenient, flexible, and autonomous access to the right tools
(Reed, 2007; Sundsted et al., 2009). The system allows people to share
underutilised resources. Coworking spaces reflect the idea of a sharing
economy and environmental sustainability in terms of providing access
to shared physical assets such as an office, meeting rooms, conference
spaces, infrastructure, cafeteria, and printing area, as well as the sharing
of the intangible assets such as information and knowledge (Bouncken &
Reuschl, 2018).
Coworking Spaces in Turkey

Coworking spaces, the membership- based workspaces where diverse
groups of freelancers, remote workers, and other independent professionals
work together in a shared, communal setting (Spreitzer et al., 2015), are
also increasing in Turkey. The lower rental costs and the networking
opportunities are increasing the demand for these shared working places.
The changing needs of the young and tech-savvy generations who value
mobility, convenience, and price advantages mean they are willing to
forgo ownership of office spaces. The knowledge workers, freelancers,
and start-up owners prefer working via a shared desk and engaging in
social and professional interaction and meetings. All of these factors have
increased interest in these shared working places in Turkey.
Historically the old Turkish business environments, the famous
Covered Bazaar, Spice Bazaar, and office blocks called “han”, were
pioneering examples of shared workplaces that brought together various
experts from different fields such as gold, silver, and copper traders as well
as leather sellers. Experiencing the importance of community building
these people cooperated and collaborated in these coworking places.
The co-locators of these spaces shared their expertise with others and
created a living space based on sharing and collaboration (Cetiz, 2017).
In these communities, there was always tea boiling in a pot or Turkish
coffee available to be brought to the office and served to the owners or
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their guests. There were also professional guilds that built cooperation,
collaboration, and the neighbourhood concept. The coworking spaces of
today are more structured and more productive working environments;
the independent professionals may share a working environment while
performing independent business activities. The coworking spaces create
social interaction and collaboration in the same, traditional way.
Coworking space providers offer fixed desks, totally furnished private
office space, shared offices, meeting rooms, and virtual offices. The first
attempts had emerged by the 2000s and were mainly focused on serving
fixed offices as a turnkey solution to users requiring flexibility, speed, and
one solution for all. Genuine coworking practices intensified in the 2010s
when many national entrepreneurs started operating. Although there
are various coworking spaces of differing scales in Turkey, Regus, eOfis,
Kamara, Workinton, Workhaus, and Kolektif House are the pioneers in
the sector due either to their date of foundation or their innovative offers.
These coworking spaces are either founded or cofounded by Turkish
entrepreneurs or are the franchisees of multinational coworking spaces
such as Impact Hub or Servcorp. While purely physical, single location
coworking spaces exist, there are also those that are members of larger
coworking spaces hubs as well as digital ones (Dunya, 2018; Tuvay,
2019; Boru, 2020). Coworking space providers are expanding their
service provision by integrating recreational events, like concerts, yoga
classes, breakfasts, brunches, professional seminars, and workshops, into
their offers.
Research Method
Research Design and Sampling

This study is an exploratory study on coworking spaces operating in
Turkey, an emerging country. This qualitative study aims to improve
knowledge regarding coworking spaces by describing the benefits of a
sample of coworking spaces.
The researchers sent invitation emails to or phoned the founders and
cofounders of 12 coworking space providers. However, there was a lower
than expected return rate in terms of getting appointments for the semi-
structured in-depth interviews. The sample consists of four coworking
spaces, three service providers (coworking spaces CWS1, CWS2, and
CWS3), and one service enabler (CWS4) linking users to service providers.
These coworking spaces offer users office spaces, meeting rooms to share
as well as creating an environment of social interaction and collabor-
ation. Basic general corporate information such as the foundation year,
number of locations, offers, the differential advantages of the sampled
coworking spaces, information about the founders/cofounders, and the
interviewees are presented in Table 9.1. As can be seen from Table 9.1
two of the sampled coworking spaces have been in operation since 2010
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and the others were founded in 2015 and 2016. Two of them (CWS1 and
CWS2) operate only in one city, while the other two (CWS3 and CWS4)
have a wider geographic coverage.
Data Collection Method, Data Collection Instrument, and Analysis

The aim of the research is to identify specific benefits of coworking spaces
in Turkey from coworking space providers’ perspective. The exploratory
nature of the study necessitated the use of qualitative data collection
method to understand the coworking sector in Turkey, emphasising
mainly the benefits offered by these four coworking space providers. Due
to the lack of research on this topic in Turkey and the research question,
a qualitative research design is utilised.
The authors collected both secondary and primary data regarding the
coworking spaces. The secondary data is collected from the websites,
mobile applications, as well as media reports about the coworking spaces
published in the print, digital, and on social media. These resources pro-
vide objective and descriptive data about coworking spaces (Eisenhardt
& Graebner, 2007; Vaskelainen & Piscicelli, 2018).
The primary data of this qualitative study is collected through in-
depth semi- structured interviews (Fontana & Frey, 1994; Denzin &
Lincoln, 1995) conducted with the founders, cofounders, chief executive
officer, and chief marketing officer of the coworking spaces during May–
June 2020. As stated in the literature, as the research aims to provide
an understanding of the motivations and thoughts of the participants,
interviews are valuable, and a semi- structured in-depth interviewing
method is utilised (Granot et al., 2012; Woodside & Wilson, 2003;
Sanday, 1979, Geertz, 1973). An interview guide is prepared to focus on
the research topic, but the interviews mostly proceeded in a spontaneous
format.
The data collection instrument is the interview guide that is presented
in Appendix I. This guide is based on the literature and the secondary data
regarding coworking spaces operating in Turkey. It includes questions
about the coworking space, opportunities and threats, competition and
the benefits of this business model for its users.
The researchers interviewed six representatives of the four coworking
spaces. One cofounder of CWS1, two cofounders of CWS2, a chief execu-
tive officer and a chief marketing officer of CWS3, and the founder of
CWS4. Each of the interviews of this qualitative study lasted around 45–
60 minutes, were recorded, and then manually transcribed by the authors.
Content analysis was used to identify themes and patterns mentioned by
the interviewees (Fontana & Frey, 1994). First, the researchers separately
identified the emerging themes in regard to the benefits of coworking
spaces and then combined them. Direct quotations from the respondents
are presented.
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newgenrtpdf
Table 9.1 General corporate information about the coworking spaces
Coworking space CWS1 CWS2 CWS3 CWS4
Type of coworking space Coworking space Coworking space provider Coworking space Coworking space enabler
provider provider
Year of foundation 2010 2015 2010 2016

Number of locations/coverage 1 city 1 city 8 cities in Turkey Digital service enabler in
7 locations 1 plaza building in a Wider hub 21 cities

Horizontal 3 to commercial district International –mostly in
4 floored small Bulgaria and Turkey
apartments mostly
with garden space.
Offers 125 offices, 8 meeting 1,150 m2 37 A+ plaza offices Linking 130 coworking
rooms offered to 27 A+ office spaces, offered to 5,500 spaces with users
1,400 “happy 8 meeting rooms, member firms
neighbours” coworking area
Differential advantage Offering relaxed Professional offer to “Network of Booking platform for
working spaces to members as well as coworking spaces” coworking spaces.
“neighbours”, walk-in customers for allowing access to The city pass –“the city is
renting company- networking. offices in a wide your coworking space”
owned offices location hub. Cowork today.
Starting a digitally Virtual networking,
linked offices facilitating customers in
concept in a wide finding the best coworking
geographic coverage spaces to work anytime,
of Turkey anywhere.
(continued)
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newgenrtpdf
Table 9.1 Cont.

Coworking space CWS1 CWS2 CWS3 CWS4
Founders/entrepreneurs Family business Corporate/banking sector Corporate 20 years of corporate
background background experience in a
multinational company
Interviewees 1 Cofounder 2 Cofounders 1 Chief Executive 1 Founder
Officer, 1 Chief
Marketing
Executive
Gender of the interviewees Male Male Male Male
Female Male
Age of the interviewees In his 30s In their 40s In their 30s In his late 40s
Education of the interviewees University graduate – University University University graduate –

Bachelor of Arts (BA) graduates –Bachelor of graduates –BA B.Sc. degree in Industrial
degree in Business Science (B.Sc.) degree degree in Engineering.
Information in Environmental Management
Management Engineering and MBA Information
degree. Systems.
BA degree in Business BS degree in
Administration Computer
Programming
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Findings
This section presents the findings regarding the benefits offered by the
four coworking spaces. The benefits of the coworking spaces, presented
in Table 9.2, are classified by the authors as functional, recreational, and
networking and community building benefits.
Benefits of the Coworking Spaces

The functional benefits are providing flexibility and efficiency to the
coworking space users. In terms of flexibility, members have the conveni-
ence of being able to move their office to any location that is owned by
a service provider, without incurring additional rental costs or furniture
and other supplies investment. Lower administrative obligations and easy
access to highly desirable business districts are the major benefits offered
by these coworking spaces.
Table 9.2 Benefits of the coworking spaces
Benefits Functional Recreational Networking

benefits benefits and community
building benefits
24/7 access x
24/7 security x
Secretarial/front desk services x
Mail and package handling x
Internet access x
Printing stations, photocopy x
and fax
IT services x
Various locations/coverage x
Leisure activities like x
meditation and yoga classes
Social events like concerts, x
brunches
Eating facilities like cafe, x
restaurant
Lounge areas x
Developmental seminars and x
workshops
Global online and offline x
community access
Discounts and offers to members x
at solution partners
0
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Our members may rent our offices monthly rather than taking out a
yearly contract and they can terminate their contracts monthly.
CWS1
Our members work in an office in a plaza in the heart of the business

district and enjoy a nice working environment without an econom-
ical investment.
CWS2
Coworking spaces allow members to have access to and share the use of
idle desks, office space, or meeting rooms rather than renting office space.
The coworking spaces provide office space, kitchen, and access to amen-
ities such as coffee, tea, photocopying, fax machine, and printers for their
users. In this way, the resources are used efficiently and generate energy
savings, thus are creating environmental benefits.
Our members are sharing a pot of tea that is boiling in the kitchen
the whole day.
CWS1
There is a shared printer on each floor for the use of our members.
CWS1
Our meeting rooms are shared by our members.

CWS2
The secretarial front desk services are also offered for handling calls
as well as mail and package deliveries of the members. The sampled
coworking spaces provide another functional benefit which is facilitating
the digitalisation of their users through the provision of internet access
via wireless hotspots, call routing services, mail and fax handling, mobile
applications, and online payments.
Our members can check availability and easily make reservation for
our offices and meeting rooms and can access their call and delivery
reports through our application on their smartphone.
CWS3
As a part of work life communal places, gardens, restaurants, and cafes are
integrated into coworking spaces’ facilities to allow employees to relax and
socialise together. Some coworking spaces even welcome non-members to
their communal places to stimulate social interaction with their members.
These examples reveal the recreational benefits offered by coworking spaces.
Life is not just for work, we also designed areas for our members to
relax and socialise. Members can drop by the restaurant for small
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snacks or browse the current magazines with our wide selection of
coffee offers at our terrace or socialise with other members.
CWS2
Although we are also located in popular business districts, we have

users who want to avoid hectic business districts and are willing to
enjoy a cup of tea in the garden of our two-story office space.
CWS1
There is a considerable number of people entering our office building

assuming it is a coffee shop or restaurant and are surprised to see our
coworking space. We do not hesitate to welcome them even though
they are not our members. Soon they become interested in our offers
and become our new members.
CWS2
While using the coffee shops, the meeting rooms, and attending the
organised special events, workshops, breakfasts, lunches, yoga classes, or
concerts, members can interact and socialise.
Our members are “working alone and together”, they enjoy our
coffee shop, meeting rooms, socialising areas. We offer breakfasts,
after-
work events, hosting talks allowing them to socialise and
network.
CWS2
The knowledge workers, the freelancers who are working in cafes

or public places have minimum or mostly no interaction with others
working in the same environment. The major shortcoming of working
at these places is the feeling of social isolation. Coworking spaces, on
the other hand, provide a working environment, where people meet,
talk, interact, and cooperate with other users. This social interaction
can lead to the exchange of ideas and knowledge as well as to socialisa-
tion, networking, and community building. These networking oppor-
tunities also increase the creativity and satisfaction of the members. The
networking and community building benefits are encouraging members
to be in contact with other coworking space users with different expertise,
leading them to find solutions to each other’s problems. So in terms of
the networking aspect, coworking spaces facilitate interaction and lead
to cooperation. At a time of increasing speed of business life, Turkish
society, as a high-context and collectivist culture, values interpersonal
relationship, and favours connection. The coworking spaces thus act as
facilitators to enhance the working condition of their users. This collab-
orative and interactive social relationship is offered either face to face or
through digital interaction.
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One of our members had a legal problem, we introduced him to our
lawyer member and he helped him in solving his problem.
CWS1
One of our members needed assistance from a web planner, she found
it in our working space and they cooperated.
CWS2
Users’ inclination to use coworking space is not solely limited to the use
of the coworking space’s infrastructure such as desks, wi-fi, conference
rooms, kitchen, and office supplies. Users also enjoy building a commu-
nity through social interaction and collaboration with other users, some-
times transcending national boundaries. Users can enjoy shared coffee
and lunch breaks as well as after- work activities. Coworking spaces
also offer networking events and training programs such as develop-
mental seminars and workshops. The model reduces digital workers’ iso-
lation and provides a social context in which individuals can interact.
A large majority of coworkers also expand their network of clients and
collaborators.
Our members have a different bond among themselves, they are like
neighbours.
CWS1
Our members feel part of a community, they meet new people, share
skills and ideas, interact with each other. They are looking for a pro-
ductive working space but also a place to hang out and socialize.
CWS2
Our latest offer is “Cowork today” which allows members to par-

ticipate in professional and social events among all the members of
the coworking spaces. It is not limited to just a single coworking
space and its members. It also provides access to a global online
community.
CWS4
The issue of community building is interesting, especially at the digital

platform. The first step in networking is taken when members meet and
socialise with each other physically at the coworking spaces. In terms
of digital interaction, it can be harder to stimulate this connectivity glo-
bally. However, members of coworking space enablers are able to make
remote connections and become part of a global online community. In
that manner, coworking space providers help to ease the interaction, in
the form of the digital socialisation either with the users and coworking
space providers or among users themselves.
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We want to make the new way of work the only way to work through
remote working. We want to create a coworking space community.
The world is your coworking space.
CWS4
People want to be connected globally and create digital connectivity.

This is the future of coworking.
CWS4
Conclusions
Structural changes occurring in urban labour markets, such as a shift to
knowledge-intensive work, acceleration of the freelancer economy, and
advances in internet and digital technologies, have altered the spatial dis-
tribution of work. These trends led to increasing individualism and the
social isolation of workers (McRobbie, 2016). As stated by Bouncken
and Reuschl (2018), the sharing economy introduced coworking spaces
as a novel trend for the workplace and entrepreneurs. Defined as an emer-
gent collaborative activity by Spinuzzi (2012), coworking spaces provide
social interaction, knowledge sharing, and exchange of ideas and lead
to beneficial collaborative activity. Although this global trend started to
be seen in the country of analysis during the 2010s it was a system that
already existed in Turkey’s business environment at the highly popular
Covered Bazaars and “han” office blocks. It has been re-introduced to
business life by these modern coworking spaces.
This book chapter is an exploratory study that describes the benefits
of coworking spaces operating in the sharing economy of an emerging
country. These benefits are grouped under functional, recreational, and
networking and community building benefits. Surely, limited need for
investment and functional benefits of coworking spaces make this form
of organising business operations demanded. The interviewees’ responses
supported the fact that coworking spaces offer more than physical assets,
also offering intangible assets such as knowledge, skills, and competen-
cies (Nica & Potcovaru, 2015; Durante & Turvani, 2018). The shared
vision of companies is evolving towards a desire for meeting places both
for work and leisure related activities, thus revealing the recreational
benefits of coworking spaces. Coworking spaces foster communication
and learning among users and hence act as a catalyst to form a com-
munity filled with ideas, knowledge, skills, and innovation (Bouncken
& Reuschl, 2018). Several studies also emphasised a major motive of
coworking space users as being able to become part of the community,
together with networking, information exchange, and collaboration
opportunities (Gandini, 2015; Foertsch, 2015; Gerdenitsch et al., 2016;
Brown, 2017). This study also revealed networking and community
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building benefits that are encouraging users to interact and cooperate.
These benefits of coworking spaces are believed to be the most crucial
ones, especially for the high context culture of Turkey.
This exploratory study’s limitation is the number of interviews
conducted with entrepreneurs from the selected coworking space
providers. For future studies, it is recommended that the sample size
be extended and that more coworking space founders/cofounders are
included. The users of the coworking spaces could also be interviewed to
understand their evaluation of the offers and benefits of these coworking
spaces. This will allow both the users and coworking space providers to
see the win-win state of the sharing economy.
Regarding the managerial implications of this study, the researchers
aimed to highlight the benefits of the coworking spaces for their users.
As technological advances increase, ways of working are changing. The
Covid-19 global pandemic of 2020 has a significant effect and may lead
to more people working remotely on a permanent basis. Rather than
being isolated at home, these workers could join coworking spaces and
benefit from their functional, recreational, and networking and commu-
nity building benefits. In this vein, the “me” worker can become a part of
the greater “we” of the coworking space community.
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McRobbie, A 2016, Be creative: Making a living in the new culture industries,
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https://openaccess.city.ac.uk/id/eprint/14478.
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coworking spaces’, Proceedings of the 2nd Geography of Innovation,
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Appendix I –Interview guide

Open-ended questions Theme
Could you please give information about the sharing The general state of
economy and coworking business model. coworking and
What are the opportunities and threats that you coworking spaces
encounter?
What is the demand for coworking spaces in Turkey?
What is the competition in Turkey as for coworking
spaces?
Name, year of foundation, number of locations/coverage, General information
information about target market/members about the
Information about the entrepreneurs and interviewees coworking spaces
What are your offers as a coworking space provider?
How do you differentiate your offer from the competitors/
differential advantage?
What are the benefits that you offer to your coworking Benefits of the
space users? coworking spaces
What is the most valuable benefit you promise as a service
provider?
Thinking about the overall benefits of coworking spaces,
what can be the specific benefits offered for the Turkish
market?
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Part III
Governance and Legal

Structure
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The EU Legal-Regulatory
Framework for Digital
Entrepreneurs in the Sharing
Economy
Emily M. Weitzenboeck
Introduction
Among the new business models that have flourished due to the ubiquity
of the internet, the advent of Web 2.0 and the growing culture of sharing
between online users is the sharing economy. Private individuals and
businesses –from micro to large businesses –are able to share unused
resources and services with other online users through the intermediation
of a third party, typically a platform or an app.
This chapter examines how digital entrepreneurship in the sharing
economy is regulated in the European Union (EU). Using the traditional
legal method to investigate the regulatory framework of digital entre-
preneurship, it seeks to identify what rules are applicable, the extent to
which such rules are mandatory, and what may be left to contractual
negotiation between the parties. Starting with an examination of basic
terms, this chapter then analyses how digital entrepreneurs are governed,
especially after the recent Uber and Airbnb judgements by the Court of
Justice of the EU (CJEU) and in light of key EU e-commerce legislation. It
first examines governance of the sharing economy platform ‘per se’ and
then looks at the position of service providers sharing goods and services
via the platform.
The Sharing Economy

Before delving into how the sharing economy is regulated in the EU,
the term ‘sharing economy’ ought to first be clarified. Although the
term ‘sharing economy’ is not defined in EU legislation, it has been the
subject of various studies commissioned by, respectively, the European
Commission and the European Parliament (Codagnone et al., 2016;
Dervojeda et al., 2013). Though many scientific articles have been written
on this new business model, there does not appear to be one commonly
agreed to definition in business and economics literature (Stanoevska-
Slabeva et al., 2017; Wirtz et al., 2019). Some scholars have focused on
the peer-to-peer sharing of underutilised physical assets between private
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182 Emily M. Weitzenboeck

persons, usually for a fee (Franken & Schor, 2017). Others envisage that,
besides the sharing of physical assets, it may also encompass services
(Cheng et al., 2020) as well as ‘other resources that are provided by peers
or platform owners’ (Wirtz et al., 2019, p. 458)1. Some authors envisage
that peers can also include firms (Cheng et al., 2020), self-employed and
owners of micro-businesses (Wirtz et al., 2019), besides private individ-
uals. Another element often highlighted by the literature is the key role of
online platforms to facilitate sharing between peers (Stanoevska-Slabeva
et al., 2017; Wirtz et al., 2019).
The lack of agreement on a definition of the sharing economy in the
literature is compounded by the proliferation of similar-sounding terms
to describe other established or emerging business phenomena such as
‘collaborative consumption’ (Belk, 2014), ‘gig economy’ (De Stefano,
2016), ‘access-based consumption’ (Bardhi & Eckhardt, 2012), ‘the
mesh’ (Gansky, 2010), and ‘peer platform markets’ (OECD, 2016).2
Ambivalence on terminology is also reflected within the EU where the
terms ‘sharing economy’ and ‘collaborative economy’ are used synonym-
ously. In a key policy document issued by the European Commission
(2016a, p. 3) that was wholly dedicated to the sharing economy, the term
was defined as follows:
business models where activities are facilitated by collabora-

tive platforms that create an open marketplace for the temporary
usage of goods or services often provided by private individuals.
The collaborative economy involves three categories of actors: (i)
service providers who share assets, resources, time and/or skills –
these can be private individuals offering services on an occasional
basis (‘peers’) or service providers acting in their professional cap-
acity (‘professional services providers’); (ii) users of these; and (iii)
intermediaries that connect via an online platform providers with
users and that facilitate transactions between them (‘collaborative
platforms’). Collaborative economy transactions generally do not
involve a change of ownership and can be carried out for profit or
not-for-profit.
Acknowledging the fluid and evolving nature of this phenomenon, the

European Commission (2016a, p. 3) stated that this definition ‘may evolve
accordingly’. Extrapolating the key elements of the sharing economy as
highlighted by the literature and by the European Commission’s defin-
ition, one finds the following: (i) sharing between peers or professional
service providers and users that is based on (ii) the provision of tem-
porary access to underutilised goods or services (iii) that may be carried
out either for profit or not-for-profit and which is (iv) facilitated by an
online intermediary such as an online platform or an app. The sharing
economy involves a triangular relationship between the sharing economy
platform, the provider of the goods or services and the recipient of such
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The EU Legal-Regulatory Framework 183

service. It is this understanding of the sharing economy that forms the
basis of the legal analysis in this chapter.
Digital Entrepreneurship and the Law: Terminology and Methodology

Business management and economics literature describe digital entrepre-
neurship as comprising new products and services based on the internet
where services are typically run in the cloud and use big data or artificial
intelligence (Giones & Brem, 2017). The sharing economy is seen as a
distinct type of digital entrepreneurship that is based on the internet and
uses digital technologies, such as cloud-based technology and peer-to-
peer platforms, to offer either physical or intangible goods and services
(Giones & Brem, 2017; Leick et al., 2020).
In the literature, besides the sharing economy platform itself, the
providers of sharing economy goods or services are themselves seen as
digital entrepreneurs (Sussan & Acs, 2017; Leick et al., 2020). Although
these actors may not perform activities that are in themselves digital, such
as the supply of Airbnb-brokered accommodation or driving services by
Uber drivers, their activities need digital engagement. Each of these actors
‘leverages digital technology and seeks and acts on these opportunities
within the marketplace’ (Sussan & Acs, 2017, p. 66).
This chapter deals with the legal and regulatory framework of digital
entrepreneurship in the sharing economy, specifically, the EU legal and
regulatory e-commerce framework. Besides differences in the research
method, there are also terminological differences between the social
sciences and legal disciplines.
This chapter follows the traditional legal method. The starting point
is relevant legislation (primarily at an EU level and secondly at a national
level) and its interpretation by the courts. Legal literature and prepara-
tory documents from the various EU institutions (e.g. the European
Commission and European Parliament) that are involved in the EU
law- making process are relevant interpretative instruments. The con-
tract between the platform, service provider and customer is another key
source of how the interaction between these key actors is regulated.3 Very
often, there is only one contract that governs the interaction between the
three actors. This is usually drafted by the platform and adhered to by the
service providers and, unless otherwise specified, the same clauses usually
apply as between the service providers and their customers, both being
users of the intermediation services provided by the platform (Smorto,
2018). Even where the parties have chosen to regulate their interaction
through the regulatory instrument of contract, sometimes mandatory rules
of law become applicable, depending on how the peers share resources
and provide services to other peers, as well as how the latter –the users –
are classified. Of key relevance to this chapter are underlying mandatory
rules that form part of the considerable body of EU e-commerce law and
the consumer acquis, i.e. the body of EU legislation as implemented by the
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various EU and European Economic Area (EEA) countries and its inter-
pretation by the CJEU. How the sharing economy digital entrepreneurs
such as the platform and the service providers are classified in the afore-
mentioned mandatory rules, in particular, whether they are information
society service providers, business users or consumers –terminology that
is central to such legislation –is fundamental to determine whether such
mandatory rules are applicable or not.
Governance of the Sharing Economy

The European Commission’s approach regarding regulation of sharing
economy platforms, like its approach to other types of online platforms,
has been a cautious one so as not to stifle the digital environment from
which new business models emerge (Howells et al., 2018, p. 336). Instead
of solely focusing on the sharing economy, the European Commission
(2016b, p. 5) has preferred to look at the broader notion of online
platforms –of which sharing economy platforms are but one e xample –
and to only address clearly identified problems that relate to a specific
type or activity of online platforms where the existing legal framework
cannot be applied to resolve those problems. It is this approach which led
to the adoption of the Platform-to-Business (P2B) Regulation 2019/1150,
discussed further below, which addresses fairness and transparency issues
in some types of online platforms.
As stated earlier, business and innovation do not happen in a legal
vacuum and pre-existing mandatory rules of law may still be applic-
able and provide constraints or limitations on how a sharing economy
platform is regulated. Some of these fundamental rules in the current e-
commerce legal framework are found in the E-Commerce Directive 2000/
31/EC (hereinafter ECD).
Governance of the Platform ‘per se’

Within the EU and the EEA, the question of how sharing economy
platforms are regulated must be resolved on a case-by-case basis and
depends on how the particular platform is set up. One must examine
what the underlying service being intermediated by the platform is, the
degree of influence the platform exercises on the actors sharing goods and
services and whether those actors are consumers or business actors.
A key question is whether the sharing economy platform can be
classified as a provider of online intermediation services, known in the
ECD as ‘information society services’ (ISS), or whether it is in fact a pro-
vider of the underlying service (e.g. transport, accommodation) being
intermediated via the platform. An information society service is a ‘ser-
vice normally provided for remuneration, at a distance, by electronic
means and at the individual request of a recipient of services’ (ECD, art-
icle 2(a)).4 At face value, sharing economy platforms appear to fall within
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the definition of a provider of ISS. However, as the Uber Spain and Uber
France judgements discussed below have shown, this is not always the
case. Why do platforms like Uber and Airbnb prefer to be classified as an
ISS provider and not a provider of the underlying service?
If classified as an ISS provider, a sharing economy platform enjoys
several benefits. According to the ECD, an ISS can offer its services in
all the other EU and EEA member states by solely complying with the
rules for the provision of ISS services in the country where the platform
is established, i.e. the country of origin (ECD, article 3).5 This is known
as the internal market rule. Furthermore, an ISS does not have to comply
with any prior authorisation or similar requirements in the country where
the ISS is offered, i.e. the country of destination (ECD, article 4(1)). If
we take Airbnb as example, according to its Terms of Service, within the
EU, Airbnb is established in Ireland.6 Airbnb must therefore comply with
Irish law requirements applicable to ISS and cannot be subjected to any
other prior authorisation or equivalent requirements from any other EU
or country where it provides its intermediation services. It is only pos-
sible for a country of destination to derogate from this rule on a case-by-
case basis and as long as strict material (namely, proportionate measures
to protect public policy, public health, public security or consumer pro-
tection) and procedural conditions (namely, prior notification to the
Commission and other member states) are observed. Once an exceptional
measure is notified to the Commission, the latter will examine whether
the measure is incompatible with Community law and, in the affirmative,
the country of destination proposing such a measure is asked to refrain
from either taking or continuing with such measure.
If the main service offered by the sharing economy platform is not
the provision of intermediation but rather the underlying service being
intermediated via the platform, the platform is not categorised as pro-
viding ISS pursuant to the ECD. Instead, the online intermediation ser-
vice is considered accessory to and absorbed in the underlying service
being intermediated. The applicable rules here are those pertaining to the
underlying service. Whether such rules are to be found at a supranational
level (EU), national or subnational (e.g. regional or local) level depends
on (1) whether the EU has competence to regulate the service in question
and (2) whether it has actually legislated on the subject. Several areas
that are relevant for the sharing economy, such as transport, consumer
protection as well as internal market issues, fall within the shared compe-
tence of the European Commission and the EU member states.7 However,
issues involving, for example, urban planning and housing policy fall
outside the competence of the EU and any legal requirements (e.g. for
authorisation, operating licences) would have to be at a national, regional
or local level (Finck, 2018).8
Determining the regulatory framework of a specific sharing economy
platform is thus a rather complex matter and revolves on whether the
platform is classified as an ISS or not. If the platform exercises a decisive
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influence over the existence and the conditions of the underlying service
mediated by the platform, the underlying service is deemed to be ancillary
to the provision of intermediation services and the platform will not be
deemed to be an ISS provider. If the platform does not exercise a decisive
influence over the provision of the underlying service and the online
intermediation is separated from the underlying service, the platform is
considered to be an ISS provider. To assess whether a decisive influence
is exercised, several criteria were set out by the CJEU in, respectively, the
Uber Spain, Uber France and Airbnb Ireland cases, namely:9
i Is the intermediation provided by the platform e.g. (app, website)

indispensable for the provision of the underlying services (e.g. trans-
port, accommodation)?
ii Who sets the price –the platform or the peer service provider (e.g.
driver, host)?
iii Who sets the other key contractual terms, e.g. control over the
quality of the asset (e.g. car, accommodation) shared, requirements
as regards the conduct of the service providers which can result in
their exclusion?
That the above is not merely a theoretical discussion but has practical
consequences for sharing economy businesses was highlighted in the
Uber and Airbnb cases. In Uber Spain and Uber France, the CJEU had to
determine whether Uber was an ISS pursuant to the ECD or whether it
provided a transport service, more specifically, non-public urban trans-
port services (e.g. taxi services). If it provided transport services, Uber
would have to comply with national laws in each of the EU countries
where it operates since there are no common EU rules or measures on
non-public urban transport.10 In Airbnb Ireland, the court had to decide
whether the French Airbnb subsidiary was an ISS or a real estate agent.
If it were a real estate agent, the French Hoguet Law which set strict
requirements on the licencing of real estate agents would have been
applicable.
Though the CJEU came to diametrically opposed conclusions and held
that Airbnb offered ISS and was not a real estate agent whereas Uber
provided transport services and not ISS, the grounds for the judgements
were the same. The court held that the service provided by Airbnb was not
indispensable to the provision of accommodation service from both the
point of view of the guests and the hosts who use the platform, since both
guests and hosts had a number of other channels at their disposal such as
estate agents, classified advertisements in paper or electronic format, or
property letting websites. On the other hand, the app provided by Uber
to its non-professional drivers and those wishing to make a journey was
deemed to be indispensable for both drivers and prospective customers.
Without such an app, those drivers would not be able to provide trans-
port services and persons wishing to make a journey would not be able to
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use the services provided by those drivers. Furthermore, whereas the Uber
app determined the maximum fare payable by customers, Airbnb Ireland
did not set the price or cap the amount of rents charged by the hosts using
that platform. The fact that Airbnb provided other optional services such
as photography services, civil liability insurance and a guarantee against
damages did not alter the conclusion of the court since such services were
ancillary in nature and did not affect Airbnb’s role as an ISS provider.
The level of control that the sharing economy platform exercises on the
underlying service that is provided via the intermediation of the platform
is thus a determining factor for establishing which rules apply to govern
the platform. That this has practical consequences is evidenced by the
Uber and Airbnb judgements discussed above. As a provider of non-public
urban transport services, Uber is subject to national law requirements for
providers of transport services in each EU and EEA country it operates in,
since there are no common EU rules on this matter. On the other hand,
as an ISS, Airbnb benefits from the internal market rule in the ECD and
only needs to comply with legal requirements in Ireland, its country of
establishment. If any EU or EEA state, as a country of destination, wants
to apply other measures on ISS providers like Airbnb –as France did in
the Airbnb Ireland case –those measures must satisfy the material and
procedural derogation requirements in the ECD mentioned above and
cannot be in breach of EU law, in particular the free movement rules.
Regulation and the Service Provider

Having examined how mandatory rules effect the governance of sharing
economy platforms, the focus now turns onto the legal and regulatory
framework surrounding the service provider who shares goods or services
via the platform with the user. This section investigates the main rules
that govern the relationship between the service provider and the plat-
form, as well as that between the service provider and the user.
Gig Economy Issues

Sharing economy platforms are often linked to the rise of the gig economy
where contractors are hired by the job rather than employed. Whether
the service providers are independent contractors or fall within the scope
of labour law as ‘workers’ has been the subject of scholarly debate and
litigation. Most of the discussion has been on what factors should be used
to determine whether a service provider is an employee or not (Lobel,
2019; Smorto, 2018). Though labour law issues are beyond the scope of
this chapter, two aspects are relevant to our analysis. First of all, if the
user providing the service is deemed to be an employee, it is the platform
that is responsible for the performance of the underlying transaction to
the user, not the service provider. In cases where the user is a consumer,
i.e. acting outside her trade, business, profession or vocation, consumer
81

protection legislation applies between the platform and the user, in add-
ition to any other sector-specific legislation, e.g. transport rules (Smorto,
2018). Secondly, even if the contract between the platform and the ser-
vice provider states that they are not in an employment relationship, or
that the service provider is an independent business user of the platform’s
intermediation services, this does not preclude either regulatory author-
ities or courts of law from regarding the platform as an employer under
labour regulation if that is ‘the actual nature of the economic activity
performed by the online platform’ (European Parliament, 2018, p. 84).
Platforms should not try to hide ‘bogus self-employment’ behind a fic-
titious contractual relationship, a matter which the P2B Regulation
discourages (article 18(2)(f)).11
Contract and the P2B Regulation

Where the service providers are truly autonomous entrepreneurs vis-
à-
vis the platform, their legal relationship is governed by contract.
However, the risk of imbalance in the terms and conditions of their con-
tract with the platform cannot be ruled out, even where both parties are
independent business actors. Sharing economy platforms, especially those
that are large and global, often enjoy a superior bargaining power vis-à-
vis service providers. Service providers may thus find themselves in a situ-
ation of increased dependency and exploited by the imposition of unfair
terms and practices by the platform (de Streel 2018). It is these concerns
about unfairness and lack of transparency by online platforms that lie at
the basis of the P2B.12
The P2B Regulation is the first EU legislation that is specifically directed
at online platforms such as sharing economy platforms. In its very first
recital, the regulation acknowledges that such platforms ‘are key enablers
of entrepreneurship and new business models, trade and innovation’, and
are of benefit to both industry and consumers alike. It imposes several
transparency obligations on the platforms in favour of business service
providers (termed ‘business users’ in the regulation) that offer goods or
services to consumers. Thus, the platform must make its contractual
terms and conditions easily available to business users, ensure that such
terms are drafted in plain and intelligible language, and that the grounds
for any eventual decision to suspend, terminate or restrict their intermedi-
ation service are set out in the contract (P2B Regulation, article 3(1)).
If a platform decides to restrict or suspend its intermediation service, it
must give a statement of reasons for its decision. If its decision was to
terminate the provision of intermediation service, it must provide at least
30 days prior notice to the service provider, together with a statement of
reasons for its decision (P2B Regulation, article 4(1)(2)). Similarly, if the
platform gives differential treatment in respect of goods or services that
either other business users or the platform itself provides or controls, the
platform must provide information on ‘the main economic, commercial
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or legal consideration for such differentiated treatment’ (P2B Regulation,
article 7(1)).
Online platforms have been criticised by legal scholars of opa-
city in their ranking criteria and algorithms (Smorto, 2018). The P2B
Regulation, therefore, obliges platforms to provide information on
the main parameters determining ranking, such as ‘general criteria,
processes, specific signals incorporated into algorithms, or other adjust-
ment or demotion mechanisms used in connection with the ranking’
(P2B Regulation, recital 24). However, although the underlying aim is to
improve predictability for business users and to enable them to compare
the ranking practices of various providers by better understanding how
the ranking mechanism works, the platform is not required to disclose the
detailed functioning of such ranking mechanisms, including algorithms.
A ‘general description of the main ranking parameters’ suffices (P2B
Regulation, recital 27).
Another issue of concern to service providers is whether they can
demand access to data provided or generated by them or by their users
through the provision of intermediation service by the platform. According
to article 9 of the regulation, the platform is only bound to state in its
terms and conditions whether business users have access (and if so, to
describe the technical and contractual access) or not to any such data.
What one immediately notes from the above analysis is that, though
the aim of the P2B Regulation was to promote fairness and transpar-
ency for business users of online intermediation platforms, most of the
rules in the P2B Regulation are actually transparency rules, not fairness
rules.13 This approach is, to a large extent, understandable, in the con-
text of transactions between two business parties. Except for situations
where platforms act as private gatekeepers to markets where they have
significant scale and market power, and which ought to be addressed by
competition policy –a matter which the European Commission (2020,
p. 10) has promised to do in the context of the promised Digital Markets
Act –broad-based ‘ex ante’ regulation of business-to-business relations
may stifle further innovation and entrepreneurship.
What there is certainly room for is to extend the sphere of application
of the P2B Regulation to cover all types of sharing economy platforms.
In its current form, the regulation only applies to platforms which are an
ISS within the meaning of the ECD. This means that service providers
in Uber-like platforms do not automatically benefit from the transpar-
ency provisions of the P2B Regulation, a result which contradicts the
Commission’s intention to capture ‘the entire online platform economy’
(European Commission, 2019).
A further limitation of the regulation is that it only applies to business
users that offer goods and services to consumers, i.e. not to other business
customers. This invites arguments as to whether the regulation ceases to
apply as soon as a business user has supplied goods or services to a non-
consumer or whether the regulation still applies as long as it offers goods
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or services to consumers, even if it also includes businesses amongst its
customers (Twigg-Flesner, 2018). Though, in practice, the more serious
platforms and service providers are likely to comply with the P2B regu-
lation in respect of all their respective customers, this calls for clarity by
the legislator.
Furthermore, the regulation does not apply to ‘peer-to-peer online
intermediation services without the presence of business users’ (recital
11). Thus, a service provider who shares resources on a one-off basis in
a non-professional capacity is not likely to be deemed to be a ‘business
user’ who is defined in the regulation (article 2(1)) as follows:
any private individual acting in a commercial or professional cap-

acity who, or any legal person which, through online intermediation
services offers goods or services to consumers for purposes relating to
its trade, business, craft or profession.
The term ‘business user’ clearly includes micro-, small-and medium-

sized enterprises (P2B Regulation, recital 2). Private individuals only fall
within this definition if they are acting either in a professional capacity
or ‘in a commercial […] capacity’. The phrase ‘acting in a commercial
capacity’ is to be read in light of what comes later on in the definition,
that is, that it offers goods or services ‘for purposes relating to its trade,
business, craft or profession’. Is an Airbnb host, who only occasionally
rents out a room or an apartment, a business user? Is a non-professional
service provider, whose main income derives from another profession, a
business user? When can one say that a private individual has become a
‘business user’ for the purposes of the P2B Regulation? In today’s digital
world, on/off legal categories such as ‘business/consumer’, typical of EU
consumer protection legislation, are no longer so viable (Lobel, 2019).
Digital platforms create hybrid types of online users, variously called
‘amateur entrepreneurs’ (Howells & Weatherill, 2005, p. 167), ‘hybrid
sellers’ (Morgan-Taylor & Willet, 2005, p. 157) and ‘hybrid consumers’
(Riefa, 2006, p. 17) by legal scholars. It is perhaps here that the rich
business management and economics literature on digital entrepreneur-
ship mentioned above can help to cross-fertilise legal literature and shed
light on what factors should be taken into account to determine when a
private individual ought to be considered to be a business user.
Consumer Acquis and Other Applicable Rules

Where the service provider is not deemed to be a ‘business user’ but a
consumer, the provision of intermediation services by the platform to the
service provider is regulated by the consumer acquis. Key issues covered
by EU consumer protection law include: (i) mandatory precontractual
information that must be provided to the consumer and a right of with-
drawal from certain contracts (Consumer Rights Directive 2011/83/EU),
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(ii) the prohibition of unfair practices, in particular, the prohibition of
misleading information, misleading omissions or aggressive commercial
practices (Unfair Commercial Practices Directive 2005/29/EC) and (iii)
the prohibition of unfair terms (Unfair Contract Terms Directive 93/13/
EEC), i.e. terms which have not been individually negotiated with the con-
sumer and cause a significant imbalance to the detriment of the consumer.
How the relationship between the service provider and its users is
regulated depends on whether the relationship is a business-to-consumer
relationship, in which case EU consumer protection legislation as
discussed in the preceding paragraph applies in favour of the user. If the
relationship is classified as either consumer-to-consumer or business-to-
business, it falls outside the realm of consumer protection legislation
and is governed by the terms and conditions of the contract between the
parties.
Conclusion
The above analysis illustrates the complex meshwork of rules that
govern digital entrepreneurship in the sharing economy. Even though
there is no ‘ad hoc’ legislation that regulates all aspects of the sharing
economy, there are both constraints and opportunities under the existing
legal framework that affect how a sharing economy platform’s business
model is regulated. The CJEU’s judgements in the Uber and Airbnb cases
examined above, in practice, imply that e-commerce legislation such as
the ECD and the P2B Regulation will only apply to the extent that a plat-
form can be classified an ISS, and may lead to two different regulatory
approaches for sharing economy platforms. In its Digital Agenda policy,
the European Commission (2020) announced an ‘initiative to improve
labour conditions of platform workers’ (p. 8) as well as an investiga-
tion into whether additional rules are needed to ensure fairness, innov-
ation and the possibility of market entry to the platform economy, which
involve public interests that go beyond competition or economic consid-
erations (p. 10). It is thus hoped that any resultant policy document and/
or any proposed rules take a coherent approach towards the regulation of
sharing economy platforms and avoid a fragmented regulatory approach.
Notes
1 Consider, for example, Zipcar drivers providing Uber trips.
2 These other terms highlight different aspects of these business phenomena.
With the term ‘collaborative consumption’, Belk (2014, p. 1597) focuses on
‘people coordinating the acquisition and distribution of a resource for a fee or
other compensation’ and thereby includes bartering and swapping in the def-
inition. De Stefano (2016, p. 1) looks at labour aspects and explains the term
‘gig economy’ as mainly referring to ‘crowdwork’ (where an online platform
connects organisations and individuals) and ‘work-on-demand via apps’. The
2
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1

term ‘access-based consumption’ focuses on the provision of access to pooled
resources without transfer of ownership offered by companies to consumers for
shared consumption (Bardhi & Eckhardt, 2012, p. 881). Gansky’s (2010) ‘mesh
economy’ is broader than ‘sharing economy’ in that ‘the mesh’ involves not only
sharing of private peer goods but also access-based consumption of goods owned
by companies. The OECD (2016, p. 7) uses the term ‘peer platform markets’ and
focuses on the commercial exchange of goods and services which may involve
the transfer of ownership between peers through internet platforms, thereby
including marketplaces such as eBay in its study of such peer platform markets.
3 Whereas legislation applies to everyone, contract is often said to act as law
between the contracting parties. See, for example, article 1372 of the Italian
and article 1134 of the French civil codes, respectively, which state that a con-
tract has the force of law between the parties (Weitzenboeck, 2012, p. 157).
4 Article 2(a) of the E-Commerce Directive in turn cross-refers to the definition
of ISS in article 1(b) of Directive 2015/1535.
5 These are requirements related to the so- called ‘coordinated field’, i.e.
requirements with which the ISS provider needs to comply for the taking
up of the activity of an ISS, such as requirements concerning qualifications,
authorisation or notification, the pursuit of the activity of an ISS, requirements
concerning the behaviour of the service provider, requirements regarding the
quality or content of the service including those applicable to advertising and
contracts or requirements concerning the liability of the ISS provider.
6 See Airbnb’s Terms of Service, opening paragraphs, definition of ‘Airbnb’.
7 According to the principle of subsidiarity, in areas of shared competence
the EU shall only act if and insofar as the objectives of the proposed action
cannot be sufficiently achieved by the member states, either at central or at
regional and local level but can rather, by reason of the scale or effects of the
proposed action, be better achieved at the EU level (Treaty of the European
Union, article 5(3)).
8 The rules adopted by many European cities on short-term rentals for private
accommodation include, for example, the imposition of different total length
of stay limits (Paris, Madrid, Amsterdam, Berlin), and technical requirements
for buildings to have separate entrances (Madrid) (Colliers International &
Hotelschool The Hague, 2018).
9 See Uber Spain CJEU judgement in case C-434/15, paragraph 39, Uber France
CJEU judgement in case C-320/16 paragraph 21 and Airbnb Ireland CJEU
judgement in case C-390/18 paragraphs 55, 56 and 58.
10 At issue in Uber Spain was the law on taxi services which required those wanting
to provide taxi services to have appropriate licences and authorisations.
11 As part of its Digital Agenda, the European Commission (2020, p. 6) has
announced that it will ‘propose an enhanced framework for platform workers’
in 2021 to address the position of people ‘who do not have a worker status
yet who share some of the vulnerabilities of workers’.
12 The regulation came into application in EU member states on 12 July 2020.
Before it becomes law in the three EEA states, it must first be incorporated
into the EEA Agreement.
13 One important exception that promotes fairness is the prohibition of retro-
active changes to contractual terms and conditions by the platform, unless
this is required by statute or the change is beneficial to the business user (P2B
Regulation, article 8(1)).
3
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1

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11
U.S. Securities Crowdfunding
A Way to Economic Inclusion for
Low-Income Entrepreneurs?
Joan MacLeod Heminway
Introduction
Crowdfunding represents the financing side of digital entrepreneurship.
Its online platforms, typically the province of digital entrepreneurs, are
designed to effortlessly bring together businesses (archetypally, startups
and small businesses) and those who desire to provide funding to them.
Funders can be donors, consumers, investors, or a combination of two
or all three.
In its most elemental and broad form, crowdfunding is a representa-
tive component of the sharing economy. It democratizes capital forma-
tion from the standpoint of both the funded and the funders. It allows
those without prototypical capital raising networks at their disposal to
finance the startup or continued operation of their business—or a part
of it—by identifying and deploying unutilized or underutilized invest-
ment capital. It invites new types of funders from new communities. The
technological developments and enhancements of digital entrepreneurs
are at the heart of it all, catalyzing a variety of crowdfunding models
and compelling related regulatory change (Pollman & Barry, 2017).
Where crowdfunding involves the offer and sale of equity, debt, or other
financial investment instruments classified as securities under applicable
law, it is commonly known, and referred to in this chapter, as “securities
crowdfunding” (but is also sometimes referred to in whole or in part as
“equity crowdfunding” or “investment crowdfunding”).
This chapter examines the legal aspects of U.S. securities crowdfunding
under the Capital Raising Online While Deterring Fraud and Unethical
Non-Disclosure Act (2012), commonly known as the “CROWDFUND
Act” (Title III of the Jumpstart Our Business Startups Act) and related
federal securities regulations. The CROWDFUND Act represents specific,
targeted federal legislation that was designed to facilitate digital business
finance in the U.S. sharing economy. The possible two-way benefits (i.e.,
the democratization of capital raising for the funded and funders through
digital means) and profit- sharing incentive associated with securities
crowdfunding together imply a relatively cost-effective way to enhance
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196 Joan MacLeod Heminway

funding capacity that may be attractive to entrepreneurs and investors,
including especially those of modest means.
Given that crowdfunding can be a means to level the capital-
raising playing field, it seems important to ask whether U.S. securities
crowdfunding—a distinctive type of internet finance—is, in fact, a prom-
ising avenue for funding entrepreneurial ventures. More specifically, as
economic challenges continue to put pressure on financial and labor
markets, this chapter explores whether U.S. securities crowdfunding is a
viable and efficient means for low-income entrepreneurs to raise capital
for their startups and small businesses and offers related observations.
Overall, although securities crowdfunding may be a tempting choice
for U.S. entrepreneurs, U.S. law and regulation create obvious and
non-obvious costs and yield somewhat uncertain benefits. Yet, market
pressures and innovations introduced by digital entrepreneurs may play a
role in increasing the efficacy of U.S. securities crowdfunding as a finan-
cing option for low-income entrepreneurs.
With the foregoing in mind, this chapter begins by describing the
research method employed in support of the included analysis and resulting
observations and proposals. The chapter next isolates a number of socio-
legal issues at the intersection of financial hardship and business finance
that highlight the uncertain, yet potentially important, economic role of
limited means entrepreneurs. After presenting those issues, the chapter
continues by offering perspectives on the potential use of U.S. secur-
ities crowdfunding to fund entrepreneurship for those in financial need.
Finally, the chapter suggests possible ways forward in addressing identified
shortcomings inherent in the securities crowdfunding solution to financing
business startups and innovations in the U.S. in times of economic distress.
Overall, the chapter aims to shine light on the role that crowdfunded secur-
ities offerings may play in promoting entrepreneurship in the U.S.
Research Method
The analysis and observations in this chapter are founded principally
on traditionally applied legal research methods and related analytical
frameworks. These methods are typically characterized as a form of desk
research. The primary objective is problem-solving. The applied legal
research employed in this chapter involves canvassing a specific area
of law for relevant legal rules and assessing their efficacy in a specific
context.
The method involves a review of both primary sources of law or regu-
lation and secondary sources of legal commentary. Primary sources most
typically include statutory and decisional law, but also may include regu-
latory principles and constitutional law. For example, because U.S. secur-
ities crowdfunding is regulated at the federal level through legislatively
enacted provisions in the U.S. Code, rules of the U.S. Securities and
Exchange Commission, and decisional law generated by U.S. federal
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U.S. Securities Crowdfunding 197

courts, each of these primary sources was canvassed to formulate the
analysis shared in this chapter. Secondary sources include empirical, the-
oretical, policy-oriented, and practical literature generated in academic
and nonacademic settings. The assessment provided in this chapter, for
instance, is informed by reading an assortment of secondary sources,
including principally law review and journal articles, as well as industry
studies and academic publications from economics, finance, manage-
ment, and other business research traditions.
The analysis that follows from the review of primary and secondary
sources identifies legal rules germane to the research question, describes
their significance in context (by relating them to factual circumstances
relevant to the research question), and offers a legal conclusion or cri-
tique and, optimally, proposed solutions to identified problems. Thus,
the support for the analysis includes the applicable legal rules themselves,
as well as related studies, commentaries, and predecessor analyses. The
legal conclusion, critique, and solutions also incorporate a knowledge of
applicable norms and the exercise of professional judgment founded in
practical or academic experience.
Theoretical Framework and Analysis
The Contextual Economic Role of the Financially

Disadvantaged Entrepreneur
Small business entrepreneurship has historically been a positive driver
of the economy in the U.S. (Kobe & Schwinn, 2018). As a result, the
financing, financial health, and overall well-being of startups and small
businesses compel attention. Law or regulation may be a valuable tool in
encouraging or discouraging entrepreneurship.
Entrepreneurship also is responsive to the economy. Economic
downturns, including significant economic dislocations like those resulting
from the 2008 global financial crisis and the 2020 COVID-19 pandemic,
may affect business finance both directly and indirectly. Investors may be
less likely to make certain types of investments, including investments in
new or small firms. Among other economic effects, labor markets typ-
ically are hard hit by economic downturns. The resulting changes in
unemployment rates may complicate the entrepreneurship picture.
Among other things, the number of necessity entrepreneurs is likely
to increase with increased unemployment. Necessity entrepreneurship is
compelled by economic factors. Nikolaev et al. (2018, p. 246) defined
necessity entrepreneurs as ‘[i]‌ndividuals who engage in necessity-based
entrepreneurship . . . do so because they have to, owing to the lack of
other options. . . . [T]hey are all pushed into entrepreneurship because
they have no other employment prospects.’ Necessity entrepreneurship
often is contrasted with opportunity entrepreneurship, which is more
a product of creative ideation and innovation. Although both types of
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entrepreneurs may be low-income entrepreneurs, necessity entrepreneurs
are by their very nature at substantial financial risk.
Increased entrepreneurship should result in a classic “win- win”
outcome. The successful encouragement of entrepreneurship should
boost the economy generally and may also have positive effects on the
unemployment rate specifically. A flourishing market for entrepreneur-
ship should provide a special benefit to necessity entrepreneurs suffering
financial challenges, offering a way to alleviate poverty more generally.
However, the overall rationale for encouraging entrepreneurship may be
complicated by, among other things, studies that indicate differences in
the economic contribution of necessity and opportunity entrepreneurship
(Acs, 2006; Acs, Desai & Hessels, 2008).
Nevertheless, aspects of socio- political economic theory predict
that encouraging low- income entrepreneurship— and more specifically
encouraging its funding through capital markets—may have positive eco-
nomic effects. Capabilities theory and binary economics, read together,
may predict that the broad and consistent engagement of low-income
entrepreneurs in business finance will have positive wealth and economic
effects. Specifically, under a capabilities approach, ‘poverty alleviation
depends on the expansion of the freedoms that people have to use their
capacities in ways that satisfy their personal objectives’ and urges attention
in this context to ‘quality of life and the freedoms associated with social
justice’ (Dyal-Chand & Rowan, 2014, p. 884). Importantly, this freedom
may not exist for necessity entrepreneurs (Gries & Naudé, 2011. Under
binary economic theory, ‘[c]‌apital has a strong, positive, distributive rela-
tionship to growth, such that the more broadly capital is acquired, the
more it can be profitably employed to increase output’ (Ashford, 2012,
p. 3). ‘It envisions broadening access to the existing system of corporate
finance to people who have historically encountered barriers to such
systems . . . by securing more equal access to competitive, individual prop-
erty rights’ (Fleissner, 2018, p. 203). Accordingly, over time, increased and
sustained participation in entrepreneurship by financially disadvantaged
entrepreneurs, including notably those who derive personal satisfaction
from their businesses, should both enhance capabilities and increase
outputs, alleviating poverty and stimulating economic growth.
Yet, entrepreneurship opportunities have a somewhat unclear rela-
tionship to poverty relief in the U.S. (Dyal-Chand & Rowan, 2014).
Entrepreneurial ventures are not typically seen as a panacea for poverty’s
ills—at least not in the sense of widespread financial wealth enhance-
ment for the individuals involved. Similarly, entrepreneurial endeavors
are not normally seen as a “sure bet” for general economic recovery in
low-income communities that may redound to the benefit of individual
low-income entrepreneurs.
Although theoretically or practically there may be much to gain from
encouraging entrepreneurship as a means of enhancing personal financial
wealth for low-income entrepreneurs, obtaining financing presents a true
91

challenge. Entrepreneurs and promoters who are themselves of limited
financial means are unlikely to be able to use or significantly rely on trad-
itional personal credit and friends-and-family funding sources to finance
their business ventures. External startup financing and small business cap-
ital are difficult to get for all in the U.S. U.S. entrepreneurs with limited
personal financial resources and a lack of financial connections find it
very challenging to fund their businesses (Hwang et al., 2019). Among
other things, low-income entrepreneurs are unlikely to regularly cross
paths with angel funds or venture capitalists, investment banking firms,
or the like. Although special programs have existed from time to time
to bring business finance prospects and related resources to resource-
challenged entrepreneurship, access to business capital continues to be
a challenge. Accordingly, ‘many entrepreneurs with good ideas, particu-
larly those who are not in the upper and middle classes, have very little
access to funds’ (Bradford, 2012, p. 101).
Startups, including entrepreneurial ventures in poor communities,
have historically had trouble finding early stage investors for a variety
of reasons (Alexander, 2013; Rezin, 2014). Digital entrepreneurship in
the form of crowdfunding is designed to address that difficulty. By effect-
ively combining the power of ecommerce platforms and social media out-
reach and engagement, crowdfunding has been successful in helping some
new and young business ventures identify previously unknown funders.
Bradford (2012, pp. 103–104) notes:
Crowdfunding makes new sources of capital available to small

businesses. It opens business investment to smaller investors who
have not traditionally participated in private securities offerings.
Those investors have less money to invest, so they would be willing
to fund smaller business opportunities that the venture capitalists and
angel investors would not touch. Crowdfunding also gives poorer
entrepreneurs whose friends and family lack the wealth to provide
seed capital somewhere else to turn.
In essence, crowdfunding, by its nature, has the capacity to pro-
vide a more inclusive source of funding for business formation
and development. More specifically, securities crowdfunding may
make a difference in this environment by introducing low-income
entrepreneurs to a wider scope of potential funders who, because
they are seeking a financial return on their investment, may be in a
position to provide some or all of the necessary capital.
The Promise of Crowdfunding for Financially Disadvantaged

Entrepreneurs
Crowdfunding has been variously defined for use and analysis in different
contexts. For purposes of this chapter, crowdfunding is an online method
02

of financing business ventures and projects through a general public
solicitation of funding from a broadly inclusive set of funders. This def-
inition is in accord with Belleflamme et al. (2014, p. 588), who describe
crowdfunding as ‘an open call, mostly through the Internet, for the pro-
vision of financial resources either in the form of donation or in exchange
for the future product or some form of reward to support initiatives for
specific purposes.’
Securities crowdfunding, the core focus of this chapter, is accomplished
through a crowdsourced offering of investment interests classified as
securities— typically, equity, debt, or investment contracts. Securities
crowdfunding has been facilitated in the U.S. by the CROWDFUND
Act. The CROWDFUND Act exempts compliant offerings of securities
from expensive and time-consuming federal and state offering registra-
tion requirements that otherwise would be applicable (Heminway &
Hoffman 2011).
Although the CROWDFUND Act was signed into law in 2012, it
did not become operative until four years later, upon the effectiveness of
Regulation Crowdfunding (2016), as approved by the U.S. Securities and
Exchange Commission (referred to in this chapter as the “SEC”). The
registration exemption has now been operative for over four years. Yet,
few widely published studies have been done on offerings commenced or
completed under the CROWDFUND Act. Some overall data is, however,
publicly available.
According to a recent summary industry report published by Crowdfund
Capital Advisors, LLC (2020), over 1,500 firms from a variety of indus-
tries (including application software, beverages, entertainment, con-
sumer, and more) have raised an aggregate of over $367,000,000 in gross
proceeds through securities offerings made under the CROWDFUND Act
during its first four years in operation, and an average of 60% of those
CROWDFUND Act offerings were successful in reaching their goals. The
same report noted a significant increase in the number of investors and
aggregate amount invested in the most recent (fourth) year of offerings
under the CROWDFUND Act as compared to those in the first year of
offerings made under the CROWDFUND Act. ‘In the very first year . .
. there were only 61,000 investors that deployed $56 million. This past
year those figures jumped to 265,000 and $138 million respectively’
(ibid., p. 3). The report (ibid., p. 7) recorded increased year-over-year
funding commitments for January and February 2020 and projected a
year-over-year increase for May 2020.
The SEC’s initial report on CROWDFUND Act offerings (2019, pp. 4),
which covers campaigns undertaken between May 2016 and December
2018, describes the number of offerings (1,351) and total amount of cap-
ital sought as ‘relatively modest’ (while also noting year-to-year increases
during the period studied). Only 519 of the 1,351 offerings included in
the SEC’s study were actually completed (ibid., p. 15). The SEC report
also noted in a summary fashion that, ‘[w]‌hile there was variation among
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issuers undertaking Regulation Crowdfunding offerings during the
considered period, the typical issuer was small and at an early stage of
its lifecycle’ (ibid., p. 17). The overall success of the CROWDFUND Act
remains to be seen and may be measured in many different ways.
Although the use and utility of the CROWDFUND Act for offerings
by low-income entrepreneurs have not been studied empirically in any
rigorous way, Crowdfund Capital Advisors (2020, p. 6) notes that the
average capital raise for an offering under the CROWDFUND Act would
effectively replace the amount typically raised by an entrepreneur through
‘personal access to capital.’ The report also notes that these firms are
largely startups and early stage ventures that may find it difficult to raise
capital from other sources (ibid, pp. 12– 13). Moreover, Crowdfund
Capital Advisors (ibid., p. 6) reports that firms using the CROWDFUND
Act to raise capital ‘have supported over 100,000 jobs since incep-
tion’ and, in light of the unemployment rate increase resulting from the
pandemic, urges the U.S. government to promote and invest in secur-
ities crowdfunding under the CROWDFUND Act for this reason. (The
SEC (2020b) in fact adopted temporary rules (applicable to offerings
commenced by August 31, 2020) that allow for expedited offerings under
the CROWDFUND Act if eligibility criteria are met).
The SEC’s data on issuers of crowdfunded securities (2019, pp. 17–
18), as alluded to above, offers a similar startup and small business profile
that could include (but is not focused on) low-income entrepreneurs.
The median offering was by an issuer that was incorporated approxi-
mately two years prior to the offering and employed about three people.
The median issuer had total assets of approximately $30,000, cash
holdings of approximately $4,000, and no revenues (just over half of
the offerings were by issuers with no revenues). Approximately 59% of
issuers had some debt prior to the offering (approximately 51% had some
short-term debt and approximately 36% had some long-term debt).
The SEC report also observed that ‘the majority of issuers have had no,
or very limited, prior experience with securities offerings and Commission
filings’ (ibid., p. 28).
The findings and observations recounted in the Crowdfund Capital
Advisors and SEC reports indicate that U.S. entrepreneurs of limited
means may be able to use (and may even already be using) securities
crowdfunding to their advantage in obtaining financing for their ventures.
Yet, the incomplete publicly reported data are not targeted to the funding
of these specific ventures. Accordingly, based on these studies, securities
crowdfunding under the CROWDFUND Act cannot be categorically
embraced or discarded as a way of promoting or supporting entrepre-
neurial efforts in low-income communities. Having said that, securities
crowdfunding deserves serious consideration as a financing option for
low-income entrepreneurs in the U.S.
In sum, securities crowdfunding under the CROWDFUND Act may
be an important financing option for entrepreneurs whose businesses are
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marginalized in the quest for traditional sources of investment capital or
do not qualify for other types of funding (Alexander, 2013; Bradford,
2012). While securities crowdfunding is still relatively young and rare
in the U.S., some foresee that it, as a form of digital finance, will be
successful in funding significant and increasing numbers of new and early
stage businesses and projects. Digital entrepreneurship has enabled low-
income entrepreneurs to tap into securities crowdfunding to enjoy some
of that envisioned success.
Importantly, the analysis and observations provided in this chapter are
intended to facilitate—but not necessarily recommend—the use of secur-
ities crowdfunding by necessity entrepreneurs and other entrepreneurs
who face financial challenges because of their low-income status. More
specifically, the legal and practical reflections in the chapter are not neces-
sarily meant to encourage widespread use of securities crowdfunding by
financially disadvantaged entrepreneurs or promote the use of securities
crowdfunding by any individual low-income entrepreneur. The use of any
business finance alternative must be carefully evaluated for its efficacy in
any individual case.
Discussion
Although crowdfunding has enjoyed a positive existence in the sharing
economy for a number of years, U.S. securities crowdfunding has not
achieved its potential. An informed examination reveals that the capacity
of internet finance, and U.S. securities crowdfunding more specifically,
to democratize the market for capital has been limited by a number of
factors. These impediments, together with ideas for overcoming them, are
reviewed, in turn, below.
Barriers to the Success of U.S. Securities Crowdfunding

for Low-Income Entrepreneurs
Given the promise of the CROWDFUND Act in meeting the needs of
necessity and other low-income entrepreneurs, what may be preventing
these founders and promoters from using securities crowdfunding
to finance their businesses? The answer to that question is reasonably
simple: the potential for securities crowdfunding as a source of finan-
cing for limited means entrepreneurs may not be realized because secur-
ities crowdfunding is too expensive, too speculative, and too complex.
Although the CROWDFUND Act and Regulation Crowdfunding
are deregulatory in nature, they include reporting and recordkeeping
requirements that require the expenditure of human and financial capital.
Moreover, as the Crowdfund Capital Advisors and SEC data indicate,
the probability of a successful campaign is relatively low. Consequently,
the costs of securities crowdfunding may not be rewarded with offsetting
benefits. Overall, the reporting and recordkeeping requirements under the
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CROWDFUND Act, taken together with the related liability provisions
and instructional mandates, represent a formidable set of legal rules to
digest and apply, even for attorneys. Regulatory complexity adds to com-
pliance and other costs.
Expense of Regulatory Compliance

The cost of starting up and sustaining a business can be substantial in
relation to an entrepreneur’s income. That expenditure is more signifi-
cant for some business venturers than for others. Laney et al. (2013,
p. 17) observe that ‘[s]‌tarting a business takes an estimated 4.4 times
the median net worth of the average [A]frican-[A]merican household
($5,677) and four times the median net worth of the average Latino
household ($6,325), compared to just 22 percent of the median net worth
of the average White household ($113,149).’ The cost of financing is only
one component (albeit an important one) of a business firm’s startup and
maintenance costs.
Among other things, U.S. securities crowdfunding involves compliance
with significant documentation and disclosure requirements (for which
retention of legal counsel and an accounting firm typically are advisable,
if not necessary) and the engagement of a mandatory intermediary—a
broker or funding portal that hosts the digital platform through which
the offering is conducted. These obligations (especially when viewed
together with the completion and litigation risks associated with
U.S. securities crowdfunding) likely outweigh the potential benefits of
securities crowdfunding for many, if not most, low-income entrepreneurs
(Alexander, 2013; Heminway, 2013–2014; Lee, 2016; Oranburg, 2015).
The SEC (2019, p. 25) estimates that an average offering of securities
under the CROWDFUND Act may cost upwards of $20,000. This
average amount includes the cost of disclosure as well as marketing, legal,
accounting, video, and campaign copy expenses, but it does not include
digital platform fees (i.e., the cost of the mandatory intermediary—a fed-
erally registered broker dealer or funding portal). These costs alone may
marginalize the utility of securities crowdfunding for necessity and other
low-income entrepreneurs.
Offering Risk
Even if limited means entrepreneurs are willing to look into securities
crowdfunding as an option, they may be dissuaded from pursuing a
CROWDFUND Act offering because the prospect of a successful offering,
given the expense of conducting the offering, is too limited. Although the
60% success rate reported by Crowdfund Capital Advisors (2020) may
be impressive as compared to venture capital success rates (depending on
how those success rates may be measured), crowdfunded securities may
not find a market. An issuer of crowdfunded securities or the securities
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themselves may carry more risk than investors desire to bear. They may
have surer bets for their capital investments, based on their calculation of
a risk-adjusted return.
In terms of risk, business failure or fraud is a distinct possibility.
‘[W]‌e must recognize that most small businesses fail— a fact that is
particularly noteworthy considering the startups that will likely utilize
crowdfunding are generally riskier than other startups …’ (Hamermesh
& Tsoflias 2013, p. 470). In addition, ‘first-time investors, borrowers, and
entrepreneurs often will not have perfect information in these markets,
and thus cannot be assured that the institutional or organizational forms
of the for-profit cyberfinancing intermediaries will deter opportunism
and fraud’ (Alexander 2013, p. 367). As a general matter, crowdfunded
securities offerings are speculative and typically illiquid, and the issuers
of crowdfunded securities may not have the management or professional
advisory support needed to succeed and limit fraudulent practices or con-
duct (U.S. Securities and Exchange Commission 2013).
The type of security offered in a CROWDFUND Act offering also may
add speculative risk to the offering that limits its potential success. Simple
Agreements for Future Equity (SAFEs) and other investment contracts
may be especially risky to both issuers and investors, for example, because
‘inexperienced retail investors may mistakenly believe that they are
receiving something simple and safe, . . . and make an investment without
fully understanding the risks that they are assuming’ (Green & Coyle
2016, p. 174). The SEC (2019) reports that 21% of the CROWDFUND
Act offerings involved the offer and sale of SAFEs.
Regulatory Complexity
Finally, the overall complexity of the regulatory structure may be a bar-
rier to some low-income entrepreneurs. The expertise, time, patience,
and other resources needed to understand the salient aspects of the
CROWDFUND Act may be unavailable or in short supply. Even with
the relatively light level of required disclosure and diligence provided
for under the CROWDFUND Act, the possibility of noncompliance
and related adverse effects on the business in this environment adds to
the perceived—and potentially the actual—cost and overall risk of the
offering. The SEC’s report (2019) recognized and described—but declined
to evaluate—this risk of noncompliance.
A More Positive Way Forward for Crowdfunded Securities Offerings

by Low-Income Entrepreneurs in the United States.
Is it possible to clear away, or at least mitigate, the downsides of secur-

ities crowdfunding for the benefit of ventures started or promoted by
low-income entrepreneurs? There do appear to be several paths forward—
some representing long-term (legislative and regulatory) solutions and
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some representing short-
term (market- based) solutions. However, the
most promising solutions depend on action by the U.S. government—
action which may not occur in the near term or long term.
Potential Federal Legislative and Regulatory Solutions

First, and perhaps most obviously, the CROWDFUND Act should be
modified to better serve entrepreneurs of limited means. Muhammad
Yunus’s words from over a decade ago ring true today in this context:
‘There is no better time for a serious discussion of how the law and lawyers
can enable the poor to help themselves—. . . especially in the United
States’ (Yunus, 2008). In particular, a reduction in the burdens and costs
on securities issuers under the CROWDFUND Act could be engineered
that would increase the affordability of securities crowdfunding to low-
income entrepreneurs while, at the same time, generating an appropriate
level of risk for investors. Alexander (2013), for example, made a spe-
cific proposal along these lines, suggesting lighter regulatory burdens for
issuers selling an aggregate of no more than $100,000 of securities to
investors and no more than $250 of securities to any individual investor,
in each case over a 12-month period. Heminway (2013–2014) also has
proposed that less regulation be imposed on smaller dollar-value offerings
and investments.
Unfortunately, proposals brought before the U.S. Congress to date
are unlikely to be helpful to low-income entrepreneurs in financing their
startups and young businesses. Instead, proposals have focused on raising
the maximum aggregate dollar amount of crowdfunded securities offerings
(which recently was accomplished by the SEC, as noted below) and clari-
fying or instituting more limited regulation of funding portals—together
with brokers, the intermediaries that may be involved in crowdfunding
(Crowdfunding Enhancement Act, 2017) or on permitting pooled invest-
ment funds to use the registration exemption under the CROWDFUND
Act (Crowdfunding Amendments Act, 2018). With a targeted lobbying
effort, however, it may be possible to focus Congress on modifications
to the current law that would make securities crowdfunding more useful
and attractive to these entrepreneurs. Digital entrepreneurs could con-
tribute positively to effective lobbying efforts.
Absent action by Congress, the SEC may be able to use its expansive
regulatory authority to decrease the regulatory cost of crowdfunding.
These changes may require effective rewriting of certain terms and
provisions of the CROWDFUND Act through agency regulation. As a
result, if Congress is either not consulted or is hostile to any proposed
changes, the SEC’s authority may be challenged, or the reform effort may
be abandoned to keep or restore regulatory peace.
In fact, cost reductions for smaller offerings under the CROWDFUND
Act have already been under active discussion among legal professionals
and industry representatives. The SEC is required by § 503(a) of the
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Small Business Investment Incentive Act of 1980 to ‘conduct an annual
Government-business forum to review the current status of problems
and programs relating to small business capital formation’ (Annual
Government-Business Forum on Capital Formation, 1980). This legal
requirement has resulted in an annual SEC Government-Business Forum
on Small Business Capital Formation.
At the forum held in November 2017, the need for cost-reduction
regulation for low-dollar-value offerings under the CROWDFUND Act
was raised and discussed at length. A related regulatory request was made
to the SEC through the final report for the annual forum required under
§ 503(d) of the Small Business Investment Incentive Act of 1980 (Annual
Government-Business Forum on Capital Formation, 1980). That request
suggested rationalizing the Regulation Crowdfunding requirements for
debt offerings (by, e.g., limiting periodic reporting obligations to actual
holders of the debt securities, rather than to the general public) and small
offerings under $250,000 (by, e.g., right-sizing regulatory burdens to
reduce currently inelastic offering costs—including the cost of required
professional services) (2017 SEC Government-Business Forum on Small
Business Capital Formation, 2017). Although the SEC is not compelled
to act on matters included in the report, members of the SEC present at
the forum indicated a desire to seriously consider taking action based on
matters arising from the proceedings (Clayton, 2017; Piwowar, 2017).
Yet, as with the congressional reform proposals, the SEC’s most recent
rulemaking relating to Regulation Crowdfunding (2020a, 2020c) is
focused on policy objectives seemingly unlikely to support low-income
entrepreneurs. The most recent initiative, proposed early in 2020 and
adopted later that same year, provided for an increase in the 12-month
maximum aggregate offering amount applicable to CROWDFUND Act
offerings (from the current $1,070,000 to $5,000,000), a removal of
the investment limits currently applicable to accredited investors, and
a change in the way in which the investment limit applicable to other
investors is calculated (allowing investors to rely on the greater of their
income or net worth in making that calculation). These changes cater
more to the capital raising aspect of offerings under the CROWDFUND
Act. For example, the SEC reported (2019) that ‘accredited investors
comprised approximately 9% of investors in this sample but accounted
for approximately 40% of amounts invested in funded offerings due to
investing higher amounts on average.’ Increasing maximum aggregate
offering amounts and eliminating accredited investor limits may allow for
accredited investors to increase their funding of any one or more business.
It is not clear how these changes may benefit or detriment issuers founded
or promoted by necessity or limited means entrepreneurs, but they do not
directly or unambiguously address barriers to the use of U.S. securities
crowdfunding by those entrepreneurs.
To be most effective in clearing away impediments to the use of
U.S. securities crowdfunding by those entrepreneurs, changes to law or
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agency rules governing securities crowdfunding should be undertaken
with low- income entrepreneurs— especially necessity entrepreneurs—
expressly in mind. In this regard, Yunus (2008, p. 24) advises that ‘[l]‌aws
should be kept as simple as possible for low-income people in particular,
to motivate them to take the next steps to help themselves.’ In general,
it seems prudent to suggest that legislative or regulatory changes should
focus on simplifying the regulatory system and processes for use in finan-
cially and economically challenged settings.
Productive, targeted, legislative, or regulatory action may not be
forthcoming, however, at any time in the near future, if at all. A number
of reasons exist for ostensible legislative and regulatory inaction on
these issues. First, getting a majority of legislators to support change
is always a complicated and expensive political issue (Buchanan &
Tullock, 1965). Second, any innovation causes change and may be a
source of systemic risk that could cause a risk-averse legislator to hesi-
tate in introducing or supporting new legislation (Ashta, 2017a). Third,
the innovation may concern only a minority of legislators and their
constituents, resulting in unlikely support from the majority in facili-
tating a legislative initiative unless it can produce some demonstrable
direct or indirect value to its members (Ashta, 2017b). Regulatory par-
alysis also is likely, given the historical aversion of the SEC to facilitating
securities crowdfunding (although that aversion has abated somewhat
in recent years, and the emergence of digital entrepreneurship has had
a role in that change).
Potential State Regulatory Solutions

In the absence of federal legislative or regulatory action, advocates of
crowdfunding as a means of poverty reduction may consider turning to
state securities regulators for help in making U.S. securities crowdfunding
a viable option for entrepreneurs of limited means, including necessity
entrepreneurs. A number of U.S. states have adopted legislation or regula-
tory schemes colloquially known as “intrastate crowdfunding.” Although
offerings under these state-based rules are geographically restricted and
have other limitations that low-income entrepreneurs may find undesir-
able, these intrastate securities offerings may represent a simpler, more
cost-
effective means of conducting a small, crowdfunded securities
offering in or for the benefit of a particular community.
Potential Market-Based Solutions

Until a legislative or regulatory solution is proposed and implemented
(and on an ongoing basis), it may be strategically productive to organize,
through industry trade associations, as well as the Small Business
Administration, the Service Corps of Retired Executives (SCORE), the
local Chamber of Commerce, local law school legal clinics, the bar, or
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others, a focused educational and advisory campaign that helps low-
income entrepreneurs assess whether a specific business or project is a
good candidate for U.S. securities crowdfunding—or, perhaps more sali-
ently, to determine that securities crowdfunding is not an appropriate
means of financing a particular venture. The campaign also could focus
on identifying and describing funding alternatives for businesses and
projects that are not well suited for securities crowdfunding. Education
and advice on negotiating fees with funding portals, brokers, and other
intermediaries also may provide encouragement and support. In many
cases, an educational and advisory campaign could be accomplished as
an enhancement or adjunct to an existing small business development
program.
Digital entrepreneurs, including funding portals, brokers, and other
internet-based intermediaries, could also play a role in encouraging and
supporting crowdfunded offerings by necessity and other low-income
entrepreneurs. For example, by adopting sliding fee scales or other means
of providing discounted services, digital entrepreneurs supplying offering
platforms and other services to entrepreneurs of limited means can help
encourage the use of crowdfunded offerings by these entrepreneurs.
Lawyers, accountants, and others also can consider more closely tailoring
the cost of their services to the financial resources of the entrepreneurs
seeking them. Lawyers may even offer their services pro bono—free
of charge—as a public service. Alternatively, a specialized market for
digital platforms and other online service providers organized as social
enterprises may develop to serve low-income entrepreneurs, among other
populations.
Additionally, assuming that U.S. securities crowdfunding can be done
cost-effectively by low-income entrepreneurs, combining it with pre-sale
or rewards-based crowdfunding may hold promise for the generation of
entrepreneurship opportunities and successes for those of modest means.
For example, a low-income entrepreneur promoting a low-cost, valued
service could offer or pre-sell that service to investors while also offering
them a small financial interest in the firm. The most likely candidate
for this type of combined financing would be a fan-funded venture (a
business seeking capital from an enthusiastic public—likely, its existing
or prospective customers or clients), a business with strong local ties
seeking funding through a community capital offering (what Cortese
(2011) calls ‘locavesting’), or a social enterprise or other mission-driven
firm designed to generate altruistic or positive emotional, as well as
financial, gain. The combined investor-clients may see the offering as
more appealing (and even less risky), enhancing the probability that they
will invest, that the offering will be fully subscribed, and that the benefit
of the offering will offset its cost. Woodard (2015) posits this combined
crowdfunding scenario as a benefit to low-income investors—to help
them rise from poverty.
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Conclusion
The sharing economy’s internet-based business finance offers the pos-
sibility of opening up new sources of funding for startups and small
businesses. Crowdfunding’s digital platforms, as two-way markets, have
the capacity to enable businesses seeking funding to access larger and more
diverse funding sources while offering funders a wider array of invest-
ment options. The offering of securities through crowdfunding further
increases this array of investment options. The use of crowdfunding—
and especially securities crowdfunding—may be especially advantageous
to low- income entrepreneurs (including, without limitation, necessity
entrepreneurs) who typically have less access to capital funding sources
than other business founders and promoters.
Yet, digital entrepreneurs should understand that securities
crowdfunding, as currently structured under U.S. law, is unlikely to be
a comprehensive— or even entirely viable— solution to the challenges
associated with funding business ventures founded or promoted by
necessity entrepreneurs and other entrepreneurs of modest means. In
fact, no single response to entrepreneurship originating out of poverty
is likely to be sufficient. ‘Successful poverty alleviation requires a multi-
pronged strategy’ (Coleman 2005, p. 187). Thoughtful modifications
or accompaniments to current U.S. securities crowdfunding regulation
(statutes or agency rules) may enable crowdfunded securities offerings
to better serve the capital needs of necessity and other low- income
entrepreneurs.
Specifically, securities crowdfunding may play a more central role in
low-income entrepreneurship in the U.S. if (1) Congress makes prop-
erly targeted changes to the CROWDFUND Act or the SEC rethinks
related agency rules to decrease regulatory costs, completion risks, or
complexity or (2) interested industry participants and advisors, including
digital entrepreneurs and legal counsel, explore and adopt innovative
practices including or relating to securities crowdfunding that focus on
entrepreneurs of limited means. Regardless, combining targeted legislative
or regulatory solutions with, e.g., entrepreneur education—potentially
resulting in different kinds of disclosure and outreach customized for use
in optimizing the funding of ventures started or promoted by necessity
or other low-income entrepreneurs—represents an intriguing and real-
izable approach. Focused education and advice may help ensure that
crowdfunding occupies an appropriate, even if not prominent, place in
the financing of new and early stage low-income entrepreneurial ventures
across the U.S.
In evaluating proposals, consideration should be given to the positive
effects that may result from both financial wealth generation and the cap-
acity for increasing other resources (including, prominently, employment).
Ideally, solutions should enhance both financial and human capital. They
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also should be highly customized. Poverty is a context-based problem.
The navigation of financially disadvantaged entrepreneurship may need
to be structured differently in different situations or communities; not
every low- income entrepreneur is the same. For example, necessity
entrepreneurs may benefit from different approaches than opportunity
entrepreneurs, and the government structures and political environments
in some communities may be more supportive or hostile than those in
others. Tailored solutions may provide incremental, but efficacious, ways
forward.
Regardless of the approach taken, there will be significant challenges.
For example, proposals must focus on how to reduce cost and risk at
the same time. Layered or combined solutions, while more complex,
may have a greater chance of achieving both goals. Yet, they also may
increase cost or risk. For instance, a combined securities/rewards-based
crowdfunding solution generates additional complexity and may increase
cost or risk.
In addition, it will be important to remember that entrepreneurs
with limited investment and capital-raising capacity are not monolithic.
Some may be necessity entrepreneurs; some may be passionate creators
or innovators; some may be a bit of each. Some may be starting their
ventures while unemployed; others may be engaging in entrepreneurship
as a side business. Some may be experienced entrepreneurs; others may
be engaging in their first entrepreneurial venture. Administrative burdens
on low-income individuals and families are generally high; however, the
exact nature of these burdens may differ as among various low-income
entrepreneurs. Securities crowdfunding will only be a viable alternative
for any individual type of low-income entrepreneur if the burdens are
proportional to the expected benefits.
Resources other than money also will likely be at a premium. Low-
income workers have limited time and energy to focus on matters
other than their employment and personal lives. For example, necessity
entrepreneurs may work more than one job or have challenging child-
care or eldercare responsibilities. The 2020 global pandemic has focused
attention on these and other issues affecting working families, including
those of modest means. Under these circumstances, it may be difficult
to engage low-income entrepreneurs in education or training. Creative
responses—allowing for internet-based instruction or obtaining grants
that would allow participants to be paid for the time they spend in edu-
cation or training modules—may address these issues in part or for some.
There may also be prejudice against necessity and other low-income
entrepreneurs in capital raising markets. On the other hand, there may be
promotional benefits to leverage through focused attention to poverty alle-
viation through crowdfunded securities offerings involving entrepreneurs
of limited means. Feasibility studies may help in determining how to
best approach the creation of a successful, sustainable U.S. securities
crowdfunding market for use by low- income entrepreneurs. Much is
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unknown about investor capacity and desires in the near term to fund
entrepreneurship of any kind through securities crowdfunding. The cre-
ation of an unsuccessful or unsustainable securities crowdfunding market
for low-income entrepreneurs in the U.S. could be counterproductive to
the encouragement of low-income entrepreneurship.
Finally, the comparative novelty and relatively short track record of
CROWDFUND Act offerings in the U.S. present a particularly difficult
challenge in funding the businesses of necessity and other financially
disadvantaged entrepreneurs through securities crowdfunding. Although
experience with this form of digital business finance is increasing, rela-
tively few examples exist of successful offerings that a particular firm can
use as a model, and the applicable law and regulation remains largely
untested. Moreover, both the national economy and the regulatory system
may continue to be in a state of flux for a significant period of time after
the COVID-19 crisis abates.
Yet, these challenges ultimately present opportunities for, rather
than true barriers to, the use of securities crowdfunding by low-income
entrepreneurs in the U.S. Crowdfunding’s promise to serve necessity
entrepreneurs and other entrepreneurs of limited means provides motiv-
ation for action, especially in light of the increase in unemployment
and other economic effects of the COVID-19 pandemic. This chapter is
designed to open doors to further inquiry and study into the effectual
use of CROWDFUND Act offerings to promote and support low-income
entrepreneurship, enabling securities crowdfunding to realize its full
potential in this important online business finance setting.
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regulation-crowdfunding-2019_0.pdf.
U.S. Securities and Exchange Commission 2020a, Facilitating Capital Formation
and Expanding Investment Opportunities by Improving Access to Capital in
Private Markets, viewed 20 September 2020, www.sec.gov/rules/proposed/
2020/33-10763.pdf.
U.S. Securities and Exchange Commission 2020b, SEC Provides Temporary,
Conditional Relief to Allow Small Businesses to Pursue Expedited
Crowdfunding Offerings [Press release 2020- 101], viewed 20 September
2020, www.sec.gov/news/press-release/2020-101.
U.S. Securities and Exchange Commission 2020c, SEC Harmonizes and Improves
“Patchwork” Exempt Offering Framework [Press release 2020-273], viewed
18 November 2020, www.sec.gov/news/press-release/2020-273.
Woodard, J 2015, ‘Could equity crowdfunding be a pathway from poverty?’,
ICTworks, viewed 20 September 2020, www.ictworks.org/2015/12/18/
could-equity-crowdfunding-be-a-pathway-from-poverty.
Yunus, M 2008, ‘How legal steps can help to pave the way to ending poverty’,
Human Rights 35(1), 22–24.
Bills, Statutes, Regulations

Annual Government-Business Forum on Capital Formation 1980, Pub. L. No.
96–477, 94 Stat. 2292 § 503 (codified at 15 U.S.C. 80c-1)
Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure Act
2012, Pub. L. No. 112–116, 126 Stat. 306 §§ 301–305 (codified as amended
in scattered sections of 12 U.S.C. and 15 U.S.C.).
Crowdfunding Amendments Act 2018, S. 3213, 115th Congress.
Crowdfunding Enhancement Act 2017, S. 1031, 115th Congress.
Regulation Crowdfunding 2016, 17 C.F.R. §§ 227.100–227.503.
4
1
2
Index
Note: Page numbers in bold refers to material in tables, in italics to figures
agriculture, environmental businesses, digital see digital

degradation and 114 businesses
Airbnb 2, 5; consumption costs 94; business failure 204
Court of Justice of EU judgement business models 53; coworking
181; Danish regulation 95; space 162–3; digital platform
information society services 24–5; disruptive activities of 4–5;
186–7; regional economies in platform-based sharing economy
Denmark see regional economies 17–18; regional sharing economy
(Airbnb); regional tourism 19; entrepreneurs 21, 24–5; scalability
socioeconomic value of 105–6; of 30–1
tourist destination effects 91–2; business start-up, regional context 19
traditional accommodation vs. buy-and-sell platforms 45
93–4; transaction costs 94; triadic
business models 62; see also tourism C2C (consumer to consumer) business
amateur entrepreneurs 190 model 92
Annual Government-Business Forum Capital Raising Online While
on Capital Formation (1980) 206 Deterring Fraud and Unethical
Aparico 95 Non-Disclosure Act (2012) see
Apple 5 CROWDFUND
asset utilization, coworking space 164 carsharing business models: B2C
autonomy: entrepreneurship 42; lack 64; regional sharing-economy
of 43; regulation 188 entrepreneurship 21
Catalant 146, 147
B2B (business-to-business) 53, 65, 67, CJEU (Court of Justice of the EU)
92; dyadic structure 62 181, 186
B2C (business-to-consumer) 53, 63–5, click and mortar entrepreneurship 3
67, 92; value creation 63–4; value co-citation analysis 60–1, 61
sharing 66 cognitive perspective, P2P 37
barrier mitigation, P2P 37 collaborative consumption
barrier to entrepreneurship mitigation, economy 74
P2P 41–2 collaborative lifestyles 73
bibliographic coupling analysis 61, 61 commercial skills, P2P 40
bibliometrics 57; sharing economy commoners business models 64
business models 59–61, 60, 61 communal places, coworking
big platforms, entrepreneurship spaces 170–1
and 5–6 communities 56; building in
BlaBlaCar 2 coworking spaces 171, 172
broad markets 46–7 competitive platforms 30
5
1
2
Index 215
consensus-based decision-making digital entrepreneurship 183–4;
process, EkoHarita 119 business model 106; definition 34;
consumer acquisition 190–1 EkoHarita 111–12; non-digital
consumer-to-consumer (C2C) business entrepreneurship vs. 18; sharing
model 92 economy and 3, 93–6; social issues
consumption costs, Airbnb 94 see EkoHarita; transition to 3–4;
content production, Turkey 114–15; see also digital
EkoHarita 117–18 subsistence entrepreneurs
contextural role, financial digital platforms: business model
disadvantaged entrepreneurs 197–9 24–5; sharing economy and 92
co-occurrence analysis 59, 60 digital social entrepreneurship see
cost reduction, P2P 37 EkoHarita
Couchsharing 2 digital subsistence entrepreneurs
Court of Justice of the EU (CJEU) 34–61; P2P 37, 38–41; resurgence
181, 186 of 35–7; transition status 40–1
coverage, EkoHarita 117–18 digital technology 3–4
Covid-19 crisis 34 disruptive activities 4–5
coworking spaces (CWS) 128–9, distinguishing characteristics, business
130–1, 132, 160–78; benefits models 67
163–4, 169, 169–73; data analysis dyadic business models 62, 66
166; data collection 166; definition
160, 161; human capital 134, 135, e-commerce 74–5;
138–9, 139; innovation fostering characteristics of 76; definition 72,
136, 136–40; innovation sources 74, 76; identified platforms 79, 81;
133–4, 134; intellectual property sharing economy vs. 81–2; social
134, 135; knowledge sources 133, commerce vs. 72
136–8; literature review 161–5; economic value: P2P 37; regional
research design 165–6, 167–8; economies (Airbnb) 104, 105
shared economies 142, 161–3; economies: collaborative consumption
technology sourcing 133, 136–7; economy 74; gig economy see gig
Turkey 164–5; see also open economy; informal economies,
innovation disappearance 35–6; local
CROWDFUND 195–6, 200–1, communities/economies 93, 95, 99;
202–3, 204, 211; changes to 205–6 on-demand economies 47, 74;
Crowdfund Capital Advisors 200 peer economy 74; platform-based
crowdfunding: definition 199; sharing economy see platform-
financial disadvantaged based sharing economy; regional
entrepreneurs 199–202; regional economies see regional economies
sharing-economy entrepreneurship (Airbnb); sharing economy see
21; securities 209; see also U. S. sharing economy; urban economies
securities crowdfunding see urban economies
Crowdfunding Amendments Act economy platform sharing,
(2018) 205 EkoHarita 110–11
Crowdfunding Enhancement Act EkoHarita 109–26; aim development
(2017) 205 115–16; coverage 117–18; data
CWS see coworking spaces (CWS) collection 112–14, 113;
development 116; digital
data access, service providers 189 entrepreneurship 111–12; driving
demand approach 101 values 116–17; economy platform
Denmark see regional economies sharing 110–11; environmental
(Airbnb) degradation and 114; founding
deprived people employment 40 principles 121–2; information &
descriptive analysis 59–61 knowledge exchange 118; literature
digital businesses: new creation 4; reviews 110–12; media and
theoretical underpinning 54–5 114–15; motivation 117; problem
6
1
2
216 Index
identification 115–16; sustainability networking 151–2; new careers
122; work, organisation and 152–3; new money 149; potential
governance 118–19 entrepreneurship 153–4; regulation
empirical research 19–20 of 187–8; worker interest 154
employment: deprived people 40; Global Coworking Survey (2019) 163
regional economies (Airbnb) global economic crisis 161, 162
103–4; regional sharing-economy global players 15
entrepreneurship 21; see also Google 5
unemployment push governance, EkoHarita 118–19
entrepreneurship: big platforms and Graphite 146, 147
5–6; definition of 72; digital see grounded theory thinking 21
digital entrepreneurship; digital
subsistence entrepreneurs; economy hierarchical organizations 40
responsiveness 197; exclusion high-status platforms 147
by poverty 46; motivation of 19, HomeAway 2
22–3, 28; platform-based sharing human capital, coworking spaces 134,
economy 18–19; push/pull of 135, 138–9, 139
146–7; sharing economy and 82–3; hybrid consumers 190
sharing economy vs. 84; social hybrid entrepreneurs 146
exchange and 84 hybrid sellers 190
environmental degradation 114 hygiene standards introduction 35
eOfis 165
European Commission 181 Impact Hub 165
European Economic Area (EEA) 184 inclusive entrepreneurial
European Parliament 181 ecosystems 46
European Union (EU): e-commerce income, regional economies (Airbnb)
law 183–4; legal-regulatory 103–4, 104
framework 181–94 independent business promotion 44
exclusive platforms, gig informal economies,
economy 147–8 disappearance 35–6
expansion 25 information exchange, EkoHarita 118
expenditure reduction, coworking 163 information society services (ISS)
exploitation: P2P 41; sharing 184, 189; classification 185–6;
economy 4 innovation 43; coworking spaces
external startup financing 199 136, 136–40; open see open
innovation
Facebook 5; buy-and-sell groups 36 Instacart 147
fan-funded ventures 208 institutional barriers, P2P 37
financial issues: disadvantaged intellectual property protection
entrepreneurs 197–9; gig economies 134, 135
151–2; regional sharing economy interactions, coworking space 162
entrepreneurs 24 internal market rule 185
financial resources: lack of 45–6; internet-of-things (IoT) 29–30, 160
P2P 41 internet providers 94–5
for-profit monetary exchange 82 internet-specific legislation 115
founding principles, EkoHarita 121–2 interregional macroeconomic
fraud 204 model 100–2
functional benefits, coworking IoT (internet-of-things) 29–30, 160
spaces 169 ISS see information society
services (ISS)
Getaround 2
gig economy 74, 145–59; definitions Kamara 165
147–8; exclusive platforms Kickstarter 2
147–8; methodology 148–9; Kiva 2
need and necessity 149–51; Klarna 15
7
1
2
Index 217
knowledge: coworking spaces 133, open innovation 129–31; data analysis
136–8; exchange in EkoHarita 118; 132–3; data collection 131–2;
open innovation and 140 extent of 133–6; refined model
Kolektif House 165 140–2; research methodology 131;
sources of 133–4, 134; theoretical
legislation, P2P 37 framework 131; see also coworking
length of stay, Airbnb 96, 97, 99 spaces (CWS)
licensing models 25 opportunity-driven mindset 23
life satisfaction, P2P 39–40, 41 opportunity entrepreneurship 95,
LiquidSpace 161 146–7; Airbnb as 95; motivation 28
local communities/economies, Airbnb organisation, EkoHarita 118–19
93, 95, 99
Love Home Swap 2 P2B (platform-to-business)
low-income entrepreneurs 198; regulation 188–90
securities crowdfunding 209; P2P (peer-to-peer) 1, 62–3, 67; barrier
startup capital 196 to entrepreneurship mitigation
Lyft 2, 47 41–2; classification 110; digital
subsistence entrepreneurs 37,
Makerspace 2 38–41; economiic benefits
mandatory precontractual 37; empowerment 34; life
information 190–1 satisfaction 39–40; limitations
market opportunities 23 41–3; opportunity range 36; real
market orientations 56 entrepreneurs 42–3; relational
market redistribution 73 benefits 38; symbolic benefits 39;
market structure 56 technology & software 28; triadic
matchmakers 63 structure 61–2; value capturing 63;
media, EkoHarita and 114–15 value chain 110; value sharing 66
microfranchising 47 peer economy 74
minimum wages, gig economy 145 permaculture principles,
mission-driven platforms 63 EkoHarita 116
motivation: EkoHarita 117; personal income, state benefit 103
entrepreneurship 22–3 PiggyBee 2
multinationals 2 platform-based sharing economy:
multisided platforms 62 business models 17–18;
entrepreneurship 18–19
narrow skillsets 42 platform models 15
necessity entrepreneurship 28, platform ownership 30
146–7, 197–8 Platform-to-Business (P2B)
need and necessity, gig economy Regulations 2019/1150 184
149–51, 154 polyadic business models 66
networking 151; coworking space potential clients, gig economies 152
163–4; coworking spaces 171, 172; potential entrepreneurship, gig
exploitation 17; gig economy economy 153–4
151–2, 154 poverty: P2P 34; relief and
new careers 152–3 entrepreneurship 198
new employees 161 private personal income 100
new money 149, 154 product renting/sharing 73
new occupations 154 produsage 110
new technology 55–6 professional relationships 23
non-digital entrepreneurship, digital profitable markets 46–7
entrepreneurship vs. 18 prohibition of unfair practices 191
non-profit business models 20 pro-social labelling 82
public procurement 47
on-demand economies 47, 74 pure play entrepreneurs 3–4
on-demand platforms 44, 146, 151 push/pull of entrepreneurship 146–7
8
1
2
218 Index
recreational benefits, coworking sharing commerce 74–5; definition 75;
spaces 170–1 identified platforms 81
regional context, business start-up 19 sharing economy 72–87, 106;
regional economies (Airbnb) 91–108, characteristics of 75, 76;
98, 99; data collection 96–9; components of 195; coworking
data processin; 96–9; data source spaces and 142, 161–3; data
96–7; data transformation 97–9; analysis 78; data collection
impact evaluation 99–102; urban 76–7, 77; definition lack 182;
economies vs. 102, 102–5, 103 definitions 2, 55, 75, 76; digital
regional-national-global scales 25, 28 entrepreneurship and 3, 93–6;
regional sharing economy digital platforms and 92; e-
entrepreneurs 15–32, 26–9; business commerce vs. 81–2; EkoHarita
model 24–5; business venture 22–4; see EkoHarita; entrepreneurship
data analysis 21–2; definition 16; and 82–3; entrepreneurship vs. 84;
empirical analysis 22–8; empirical evolution of 73–4; exploitation
research 19–20; literature review of 4; governance of 184–91;
17–20; managerial implications identified platforms 79; platform-
29–31; methodology 21–2, 22; based see platform-based sharing
research design 20–1; sampling economy; regulation 181–3; social
process 20–1 commerce and 82; synonyms for
regional tourism, Airbnb 19 74; theoretical underpinning 55–6;
Regus 165 value of 52
relational benefits, P2P 38 sharing economy business models
relational perspective, P2P 37 52–71; bibliometric analysis 59–61,
renting income 100 60, 61; content analysis 61–2;
replicative businesses 43 descriptive analysis 59–61; samples
resource sharing, B2B 65 57–8; search procedures 57–8;
ride-hailing platforms 36 theoretical underpinning 54–6;
risk levels, gig economy 145 three-phase analysis 58–9
risk society 146 sharing economy entrepreneurs 25,
Rotating Savings Credit Associations 28; regional see regional sharing
(ROSCAs) 45–6 economy entrepreneurs
sharing platforms 44–5; control of
SAFEs (Simple Agreements for Future underlying services 187
Equity) 204 Simple Agreements for Future Equity
safety standards introduction 35 (SAFEs) 204
SAM-K/LINE® (LINE) model 100–2 skill broadening 151
SCORE (Service Corps of Retired sliding fee scales 208
Executives) 207 Small Business Administration 207
search procedures, sharing economy small business capital 199
business models 57–8 Small Business Investment Incentive
SEC Government-Business Forum on Act (1980) 206
Small Business Capital Formation social capital, P2P 37
(2017) 206 social commerce 74–5;
secretarial front desk spaces 170 characteristics of 76; definition
securities crowdfunding 209 72, 76; e-commerce vs. 72;
self-employment 145; necessity of 36; identified platforms 79, 81; sharing
platform use 19 economy and 82
Servcorp 165 social interactions: coworking
Service Corps of Retired Executives space 163–4; coworking spaces
(SCORE) 207 171; entrepreneurship and 84;
service providers: data access 189; erosion of 36
regulation and 187 social issues, digital entrepreneurship
shared infrastructure providers 64 see EkoHarita
share washing 82 social service providers 21
9
1
2
Index 219
socio-economic theory 198 EU regulations 186; on-demand
software, P2P 28 platforms 47; triadic business
Spacecubed 161 models 62
stable working environments 41 underutilized assets 62–3
startup capital 196 unemployment push 146; extended
station-based business models 64–5 periods of 150–1
structural perspective, P2P 37 unfair practice prohibition 191
structure questionnaires 20–1 United Kingdom (UK) Government,
students, innovation source 138 independent business promotion 44
Superprof 2 urban economies: peripheral
sustainability, EkoHarita 122 economies vs. 102–5; regional
symbolic benefits, P2P 39 economies vs. 102, 103
Urbano 95
TaskRabbit 2, 147 user-friendly solutions, sharing
technological advances 1 economy 55–6
technology: coworking space 133, user-generated posts 80, 80
136–7, 163; open innovation and U.S. Securities and Exchange
140; P2P 28; regional sharing Commission 196–7
economy entrepreneurs 24–5; U.S. securities crowdfunding 195–216;
sourcing 133, 136–7; support 163 barriers to 202–3; expense of
terminology: ambivalence of 182–3; 203; federal legislation 205–7;
digital entrepreneurship 183–4 market-based solutions 207–8;
three-phase analysis, sharing offering risk 203–4; potential
economy 58–9 state regulatory solutions 207;
TopTal 146, 147 regulatory complexity 204–5;
tourism 91–2; drivers for 93; spending regulatory solutions 205–7; research
97; see also Airbnb methods 196–7
traditional accommodation, Airbnb
vs. 93–4 value capture 67; B2B 65; P2P 63
training programs, coworking value chain; digital technology 3–4;
spaces 172 P2P 110
transaction costs: Airbnb 94; value-creation 17, 67; B2B 65;
reduction of 5 B2C 63–4
transportation lack 42 value-distribution 17
triadic business models 61–2, 66 value propositions 63, 67
Turkey: coworking spaces 164–5; value sharing, B2C 66
digital entrepreneurship 114–15; volunteers, EkoHarita 118–19
internet-specific legislation 115;
see also EkoHarita Web 2.0-based social media 1, 6
Turo 2 welfare providers 21
two-sided markets 17 work, EkoHarita 118–19
Workhaus 165
Uber 2, 5; autonomy 42; Court of working alone and together 161
Justice of EU judgement 181; Workinton 165
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i

Digital Entrepreneurship and the

The digital and increasingly digitised world is shaped by the interplay of

Evgueni Vinogradov is a senior researcher and former research director at

Birgit Leick is an associate professor in Innovation and Entrepreneurship

Djamchid Assadi is a professor of Digital and Sharing Economy and

Routledge Studies in Entrepreneurship

This series extends the meaning and scope of entrepreneurship by cap-

Contextualizing Entrepreneurship Theory

Entrepreneurial Marketing and International New Ventures

Entrepreneurship, Dyslexia, and Education

Women and Global Entrepreneurship

Digital Entrepreneurship and the Sharing Economy

Digital Entrepreneurship and

First published 2022

Dedicated to my uncle Igor who has inspired and enabled me

To my family: Edith and Wolfgang, Annette and Roland,

To my supportive family, Goli, Anahita and Cyrus. To my

1 Regional Sharing-​Economy Entrepreneurs and the

2 Digital Subsistence Entrepreneurs in Developed

3 Digital Entrepreneurship across P2P, B2C and B2B

5 Asymmetries of Local Economic Impacts of Digital

6 How Can Digital Entrepreneurship Address Social

7 Fostering Open Innovation in Digital Startups: An

8 Gigging with an MBA: When Elite Workers Join the

9 Coworking Spaces in the Sharing Economy:

10 The EU Legal-​Regulatory Framework for Digital

.1 The theoretical dimensions of the concepts

1.1 The four sharing-​economy entrepreneurs and their

Notes on Contributors xiii

xiv Notes on Contributors

xvi Notes on Contributors

The concept of the sharing economy has become increasingly popular in

2 Evgueni Vinogradov et al.

Definitions of the Sharing Economy in This Book

The Transition to Digital Entrepreneurship

4 Evgueni Vinogradov et al.

Digital Entrepreneurship in the Sharing Economy:

• First, entrepreneurship in the digital age incorporates various elem-

Entrepreneurship with Big Platforms and Reduced Transaction

6 Evgueni Vinogradov et al.

The Structure of This Book

8 Evgueni Vinogradov et al.

10 Evgueni Vinogradov et al.

Summary of the Aims and Approach of the Present Book

12 Evgueni Vinogradov et al.

16 Birgit Leick et al.

Regional Sharing-Economy Entrepreneurs 17

Business Models in the Platform-​Based Sharing Economy

18 Birgit Leick et al.

Entrepreneurship in the Platform-​Based Sharing Economy

Regional Sharing-Economy Entrepreneurs 19

Regional Sharing-​Economy Entrepreneurs in the Existent

20 Birgit Leick et al.

Methodology and Research Design

Research Design and Sampling Process

Regional Sharing-Economy Entrepreneurs 21

Methodology and Data Analysis

22 Birgit Leick et al.

Aggregate Business model

Movaon: Start-up phase Financial structure Future orientaon

Figure 1.1 The theoretical dimensions of the concepts.

The Entrepreneurship and Business Venture of Regional

1 Regional Sharing-Economy Entrepreneurs and the

10 The EU Legal-Regulatory Framework for Digital

1.1 The four sharing-economy entrepreneurs and their

Business Models in the Platform-Based Sharing Economy

Entrepreneurship in the Platform-Based Sharing Economy

Regional Sharing-Economy Entrepreneurs in the Existent

Movaon: Start-up phase Financial structure Future orientaon

Figure 1.1 The theoretical dimensions of the concepts.

seems different from what the car-sharing platform A summarises as

The Regional-National-Global Scales for the

A • Opportunity- • Professional • Local start-up No funding Customer

B • Opportunity- • Personal and • National National • Customer

C • Opportunity- • Professional • National International • Customer

Business model Digital platform Future-related approach

• Sharing- • Easy handling • Platform Entrepreneur Expansion and

D • Opportunity- • Professional • Local start-up National • Customer

Business model Digital platform Future-related approach

The lack of autonomy is reinforced when micro-entrepreneurs are fully