Technological Forecasting & Social Change 169 (2021) 120804

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Technological Forecasting & Social Change

journal homepage: www.elsevier.com/locate/techfore

Sharing economy platforms: creating shared value at a business

ecosystem level
Ke Rong a, Boyi Li b, Wan Peng c, Di Zhou a, Xinwei Shi a, *
a
Institute of Economics, School of Social Sciences, Tsinghua University, Hai Dian District, Beijing 100084, PR China
b
Department of Management, London School of Economics and Political Science, Houghton Street, London, UK
c
Department of International Relations, London School of Economics and Political Science, Houghton Street, London, UK

A R T I C L E I N F O A B S T R A C T

Keywords: Sharing Economy Platforms (SEPs) are, in general, easily challenged by social ethics and culture, and are
Sharing Economy Platforms (SEPs) vulnerable to social and institutional uncertainties. Drawing from the Creating Shared Value (CSV) concept
Creating Shared Value (CSV) (Porter and Kramer, 2011), this article investigates whether CSV activities assist SEPs in retaining sustainable
Sharing Economy
innovation at a business ecosystem level. Based on the Polanyian embeddedness framework, we specifically
Business Ecosystem
examine how SEPs’ CSV co-evolves and aligns with virtue ethics and local culture across three growth stages:
Community stage, Scaling-up stage, and Legitimation stage. Data for this research were collected from multiple
case studies from two major sectors: the bike-sharing platform sector and the ride-sharing platform sector. Our
findings indicate that SEPs should co-create shared values by embedding virtue ethics and local culture into their
work with key ecosystem partners in order to preserve sustainable innovation. The research contributes to an
evolving understanding of CSV activities in the sharing economy literature on SEPs, as well as proposing some
practical implications for industrial practitioners and policymakers.

1. Introduction established organizations or lobbying groups, while also having to

Nowadays, the people of China are accustomed to being part of the
sharing economy, by using platforms for sharing bicycles, rechargeable
products and so forth (Chi et al., 2020). The so-called sharing economy is
defined as the “acquisition or distribution of a source coordinated by
people for a compensation or a certain fee” (Belk, 2014, p.1597). It also
refers to social innovation activities that improve the collective effi­
ciency of employing under-used or idle resources (e.g., labour, ma­
chines, space, services, knowledge or information, and consumable
resources) by creating a pool of common resources on digital platforms.
As such, the sharing economy has great potential in corporate social
responsibility (CSR) because it shares the common goal of reducing
environmental impacts and focuses on the principles of reusing, recy­
cling and sharing. Nonetheless, sharing economy platforms (SEPs) are
not only vulnerable to tax changes and the unexpected consequences of
strict regulation, but also to macro-environmental uncertainties. For
instance, a recent study has shown that SEPs have been vulnerable
during the COVID-19 pandemic (Chen et al., 2020). Contrasting with the
traditional sectors, SEPs are relatively lacking in support from
address the tension between economic values and virtue ethics and
culture. If SEPs suffer greater financial loss due to the fall-out of unex­
pected events (e.g., COVID-19), it might be difficult for them to pay
more attention to their CSRs.
The pursuit of the modern economy, which balances wealth creation
and the collective wellbeing and solidarity of society, has a longer his­
tory in the realm of social and political philosophy, and may arguably
begin with Adam Smith’s seminal attempts to address the tension be­
tween the “invisible hand” (i.e., market, value) and the “moral senti­
ments” of economic actors (i.e., society, virtue ethics) (Kant, 1991;
Sandel, 1998; Sen, 2010; Smith, 2009). The former focuses on the eco­
nomic mechanics of institutional arrangements, which are capable of
internalizing certain transaction costs as a result of external pressures (e.
g., regulation, cultural norms, or other forms of social concerns or col­
lective actions). The latter, in contrast, regards the social politics of
economic actors as the necessary motivation for economic activities in
enacting institutional change (i.e., in communities, cultural identities or
social movements). The former constitutes the crux of the economic
conceptualization of CSR as a kind of rational choice, reducing the social

* Corresponding author.
E-mail addresses: r@tsinghua.edu.cn (K. Rong), b.li2@lse.ac.uk (B. Li), w.peng4@lse.ac.uk (W. Peng), zhoud17@mails.tsinghua.edu.cn (D. Zhou), xinweishi@
mail.tsinghua.edu.cn (X. Shi).

https://doi.org/10.1016/j.techfore.2021.120804
Received 13 July 2020; Received in revised form 25 March 2021; Accepted 9 April 2021
Available online 4 May 2021
0040-1625/© 2021 Elsevier Inc. All rights reserved.
K. Rong et al.
concerns and moral sentiments of economic actors in their risk calcu­
lations (Arrow, 1973; Besley and Ghatak, 2007; Husted and Allen, 2007;
Orlitzky et al., 2011); while the latter sees a firm’s strategic agency in
society as an opportunity to align economic interests with moral com­
mitments (Friedland and Alford, 1991; Selznick, 1953). The latter view
of understanding the tension between value and virtue ethics is less well
developed and largely lacks convincing theoretical accounts, despite the
huge potential of finding synergies between profit and social virtue
ethics. There are two competing theories explaining how firms address
this tension: transaction cost economics (Barney, 1991; Coase, 1937;
Penrose, 1955), and the Polanyian notion of embeddedness (Beckert,
2007, 2009; Krippner, 2001; Krippner and Alvarez, 2007; Polanyi, 1944,
1977).
Further, Porter and Kramer (2011) proposed the Creating Shared
Value (CSV) approach that highlights the connection between firms’
economic growth and societal benefits. Acquier et al. (2019) also argue
that the sharing economy appears to have a great altruistic mission from
the perspective of sustainability or shared-value creation. If ‘sharing’
indeed becomes a reliable alternative institutional arrangement to
market and hierarchy, how should a strategist convert a firm’s relative
advantages from longstanding institutional mechanisms (embedded­
ness, market, and hierarchy)? Our efforts to explicate the strategic im­
plications of a sharing economy can be framed thus: how SEPs offer a
realistic strategic option to align their aspiration for social leadership in
the community with the incentive of seeking competitiveness and
profitability in the era of digital economy.
Tan and Wang (2011) suggest that an ethical belief refers to a part of
institutional logics in a particular context (e.g., a given culture or
country). In the era of the sharing economy, Berkowitz and Souchaud
(2019) support the notion that the multi-stakeholder meta-organization
built by SEPs can effectively address governance gaps (i.e., virtue ethics)
by means of collective legal, ethical, and utilitarian work. In this article,
we respond to Porter and Kramer’s (2011) call for more theorizing ef­
forts to further the concept of CSV, which envisions a new way of
reformulating CSR by tapping into the embedded potential of commu­
nities and transforming sociality into economic values. As a result, CSV
can be somewhat regarded as Visser’s (2011) CSR 2.0 notion, which
highlights the four factors of value creation, good governance, societal
contribution, and environmental integrity. Differing from traditional
firms that create value within the boundaries of a supply chain, digital
platforms depend on an ecosystem of autonomous stakeholders to
co-create value (Hein et al., 2020). Moreover, the nature of platforms is
changing as their surrounding communities and technologies drive them
(Cusumano et al., 2020). Furthermore, ecosystems can support business
model development via new creations and the appropriation of value
(Rong et al., 2018), and by addressing current issues in the sharing
economy (i.e., lack of regulation, tax obligations) (Leung et al., 2019).
As a consequence, we further argue that SEPs’ shared values should be
co-created at a business ecosystem level with their key stakeholders, and
embedded into actionable guidelines for creating competitive and sus­
tainable advantages.
Above all, there is a large pool of literature on how digital platforms’
CSR practices should be aligned or co-evolved with technology inno­
vation. However, this article’s main research question is: “How do SEPs
co-create shared values to make their innovation sustainable by
embedded virtues while co-evolving with their ecosystem partners?” We
believe this article makes three contributions to extant literature on
digital platforms, with particular implications on SEPs and the CSR
accordingly. First, our findings contribute to the sharing economy
literature by demonstrating that the SEP should co-create shared values
by embedded virtue ethics and culture with key ecosystem stakeholders
in order to keep innovation sustainable. Second, this article provides a
novel understanding of SEPs regarding how their CSR practices should
be aligned and co-evolved with the CSV activities across different
growth stages. Third, this article also contributes to the literature by
identifying some practical implications for practitioners and related
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Technological Forecasting & Social Change 169 (2021) 120804
policymakers in the sharing economy sectors.
2. Literature review
2.1. Sharing economy platforms and creating shared values
The sharing economy (e.g., Airbnb, Uber, DiDi), which is facilitated
by an online platform, has gradually changed customers’ consumption
behaviours from buying new products and services to sharing and
reusing (Jeon et al., 2020). While SEPs continue to grow and develop
into sustainable societies, there are conflicts arising between economic
profits and social benefits (Mi and Coffman, 2019). The successful
implementation of environmental CSR can enhance a service provider’s
reputation (Marin et al., 2009), consumer-company identification and
the perceived value of sustainability (Wang and Ho, 2017). As for digital
platforms, Lobschat et al. (2019) argue that they need to meet the
relevant obligations and choose an appropriate CSR strategy that
matches their business model by redesigning value creation and value
appropriation.
Moreover, the sharing economy can increase employment (Belk,
2014), nurture more sustainable business and consumption models
(Cohen and Kietzmann, 2014), and expedite the green economy (Gri­
nevich et al., 2015). The UK and European Union had already begun to
comprehensively assess the legal, social, economic, and environmental
impact brought about by the sharing economy (EPRS, 2016). Indeed, the
sharing economy was originally depicted as a social movement, which
tends to be more ethical and sustainable, and largely facilitates new
forms of market or non-market exchange (Botsman and Rogers, 2010;
Schor and Thompson, 2014). As discussed above, the sharing economy
has great potential in CSR. Consequently, we may need to ask how SEPs
address the CSR issues while they are struggling with competition and
basic survival. Recently, CSR has transformed from the management’s
idiosyncratic philanthropic activities to a common and valuable activity
of stakeholder management for measuring a company’s strategic busi­
ness performance (Kolodinsky et al., 2010); that is, companies are more
often required to create shared values for various stakeholders. Halal
(2001) argued that the conflict between profitability and social re­
sponsibility can be dealt with when regarding stakeholders as critical
partners who may contribute to the creation of economic and social
values as well as via the collaborative problem-solving approach. Dab­
bous and Tarhini (2019) proved that perceived economic benefits can
facilitate sustainable consumption via the SEPs. Therefore, the CSV
concept proposed by Porter and Kramer (2011) seems to provide a
feasible solution.
Porter and Kramer (2011, p.66) defined the concept of CSV as
“policies and operating practices that enhance the competitiveness of a
company while simultaneously advancing the economic and social
conditions in the communities in which it operates”. To some extent, the
CSV view is aligned with the nature of SEPs: the value depends on the
surrounding network or communities (Nadeem et al., 2020). SEPs can
survive and enable value creation activities because of the social support
from platform participants. Existing studies on the sharing economy
have revealed some similar CSV-oriented evidence, though no study has
systematically explored CSV in the context of the sharing economy.
Crane et al. (2014) articulated three ways of CSV: first, firms rec­
onceive products and markets by identifying social problems while
serving consumers; second, firms redefine the supply chain productivity
while strengthening social, environmental, and economic capabilities of
supply chain members; third, firms enable local cluster development
while cooperating with suppliers and local institutions. As seen in
Table I, the CSV concept leverages the resources and expertise of the
firm to create economic value by creating social value. Nonetheless,
critics of the CSV concept say that it is unoriginal because it ignores the
tension inherent in responsible business activities; and that it is naive
with regard to business compliance as it is based on a shallow concept of
the corporation’s role in society (Crane et al., 2014).
K. Rong et al.
Table I
Dimensions of Creating Shared Values (CSV).
Dimensions CSV
Economic • Co-create economic value with stakeholders including
Value governments, foundations, universities, NGOs and other
companies (Porter and Kramer, 2006; Pfitzer et al., 2013)
Social Value • Nutrition: provide inexpensive micronutrient-reinforced spices
in business (Porter and Kramer, 2011; Pfitzer et al., 2013;
Crane et al., 2014)
• Health: improve medical care through a social business model
(Pfitzer et al., 2013)
• Sustainability: integrate environment protection and resource
conservation into business models (Porter and Kramer, 2006;
Pfitzer et al., 2013; Crane et al., 2014)
• Education: turn education into profitable business (Porter and
Kramer, 2006; Pfitzer et al., 2013)
• Employment: employ surrounding communities (Pfitzer et al.,
2013)
• Social justice: enable local cluster development (Porter and
Kramer, 2011; Moon et al., 2011; Pfitzer et al., 2013)
• Reputation: create social reputation and social impact (Porter
and Kramer, 2011; Pfitzer et al., 2013)
Example • Joint value creation for firms and community
• Replace the firm’s energy with green energy
• Encourage more employers to participate in the value co-
creations
2.2. Sharing economy platforms: Three development stages
Economic explanations for the sharing economy can be found in the
theory of transaction cost (Coase, 1937), collaborative consumption
(Felson and Spaeth, 1978) and two-sided markets (Rochet and Tirole,
2006). As for small and growing businesses, Lewis and Churchill (1983)
identified five stages of a firm’s growth, including Existence, Survival,
Success, Trade-off, and Resource Maturity. Kazanjian (1988) catego­
rized firms’ growth into four stages: Conception and development,
Commercialization, Growth, and Stability. Similarly, the organizational
lifecycles are also divided into four stages: Formation, Early Growth,
Later Growth, and Stability (Dodge and Robbins, 1992). Drawing from
Dodge and Robbins (1992), we can further simplify the traditional firms’
growth stages as formation, growth, and stability. The sharing economy
has become a prevailing and ground-breaking economic phenomenon
with the boom of the digital economy, and acts as a template for business
model innovation in value co-creation (Belk, 2014).
The SEPs’ three growth stages can be elaborated on as follows.
Community stage: As for SEPs’ early development stage, the value
creation is critically important. For instance, Airbnb facilitates its value
creation activities via online communities in which user participation
and interaction are encouraged (Cheng et al., 2020; Reischauer and
Mair, 2018). Given the nature of SEPs, we redefine the formation stage
as the Community stage for this type of platform.
Scaling-up stage: As for the growth stage, SEPs need to attract an
increasing number of users and expand their platform network base. We
redefine the growth stage as Scaling-up stage for SEPs.
Legitimation stage: SEPs also need to achieve legitimacy to maintain
long-term relationships with various communities (Nasi et al., 1997).
Recently, some socially irresponsible practices are challenging SEPs’
legitimacy (Hwang, 2019). So, we call the traditional firms’ stability
stage the Legitimation stage for SEPs while emphasizing the most
important concern faced by most traditional firms’ stability stage.
2.3. Co-creating shared values by polanyian embeddedness
From the perspective of evolution, social media first enabled code
sharing (e.g., Linux), then allowed us to share our daily lives (e.g.,
Facebook), and also encouraged content sharing (e.g., YouTube) (Bots­
man and Rogers, 2010), and now it expands into service and asset
sharing (e.g., Uber and Airbnb). The sharing economy can also be
described as the access economy (Eckhardt and Bardhi, 2015), and its
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Technological Forecasting & Social Change 169 (2021) 120804
separation of usage and property rights in a relatively low transaction
cost via multi-sided market platforms increases the willingness of
collaborative consumption. The sharing economy also revealed a change
in trend from “adapted sharing”, a primary sharing pattern based on the
existing idle resources, to “born sharing”, a more efficient and less un­
certain sharing pattern based on the initial resource allocation (Rong
et al., 2017). From the perspective of consumers, social support can
influence the ethical perceptions of SEPs and determine the value
co-creations (Nadeem et al., 2020). Accordingly, no SEPs will operate in
a vacuum, but exist in an ecosystem where various stakeholders may
influence the co-creation activities, and societal conditions (i.e., insti­
tutional regulations, government policies) may restrict product or ser­
vice innovations. Moreover, a social movement called collective impact
(Kania and Kramer, 2011) largely determines firms’ collaborations in
the social sector, which also encourages various actors (e.g., companies,
government, community members) in their ecosystem to make business
adjustments in alignment with social development needs. The collective
impact may not only stimulate companies’ social progress, but also bring
more economic opportunities (Kramer and Pfitzer, 2016). CSV consists
of five mutually reinforcing elements: introducing a social purpose,
rigorously defining the social need, measuring the social and business
value, creating the optimal innovation structure, and co-creating with
external stakeholders (Pfitzer et al., 2013).
The strand of organizational institutionalism literature suggests that
firms actively intervene in fields of socio-political activities, and address
social concerns by consciously constructing an ideology, participating in
social movements, seeking alternative sources of legitimacy, and con­
structing new cultural identities (Edelman et al., 2017; Friedland and
Alford, 1991; Greenwood, 2008; Greenwood and Hinings, 2017; Law­
rence and Suddaby, 2006; Selznick, 1953; Thorton and Ocasio, 1999).
Polanyi highlighted two core meanings of embeddedness: first, markets
have been necessarily limited by institutional regulations; second, it
indicates that the political or social reformist task is to stabilize a societal
organization through the institutional regulation of markets (Beckert,
2007, 2009). In this context, firms are not just to change institutional
conditions but also change the logic of cultural values, which is known
as institutional work (Lawrence et al., 2013). The embeddedness
perspective suggests that firms’ strategic behaviour is regarded as an
opportunity for leadership to change the institutional logic and enact
social change by forging new ways of legitimation. Considering the three
different stages discussed above, SEPs may experience the embedded­
ness or dis-embeddedness of social virtue ethics.
There is an ongoing concern about the significance of the sharing
economy in the context of ubiquitous digital connectedness, particularly
about the logic of strategy-reasoning in the digital age. At the core of
such a discussion is the conceptualization of “sharing” as a new form of
trust-building and coordination in digital networks. Specifically, to
make the embedded economic action comprehensible, three coordina­
tion problems have to be initially dealt with, including value, compe­
tition, and cooperation (Beckert, 2007, 2009).
2.4. Value
The term “sharing economy” has been seen as an emerging new
culture whereby people can share their belongings with others via online
platforms (Bucher et al., 2016). Many theoretical models of the sharing
economy have shown that a sharing mechanism can increase access to
highly valuable assets at a lower cost, which increases economic effi­
ciency and social welfare (Fraiberger and Sundararajan, 2015; Horton
and Zeckhauser, 2016; Jiang and Tian, 2015). In addition, the
standard-setting of value is a social, cultural, and political process
negotiated among actors of different agency in order to reach consensus,
known as the cognitive process of commensuration (Beckert, 2007,
2009). For instance, IT company-sponsored education and training
programmes (i.e., the vision campaigns) aim to cognitively influence a
client’s capability to understand and appreciate the value of information
K. Rong et al.
systems (Swanson and Ramiller, 1997, 2004). Prahalad and Ram­
aswamy (2004) suggest that value co-creation means a process in which
different parties collectively engage in the production of valued out­
comes. In short, the process of valuation is of a social nature. Similarly,
the strategic moves of what Moore referred to as “the evangelic,
visionary leadership” have also been documented in the business
ecosystem literature (Moore, 1996; Rong et al., 2019; Parente et al.,
2019).
Rong et al. (2019) found that price is not a significant influencing
factor in a digital platform’s user stickiness, but appropriability re­
sources as inimitable values are critically important. In the context of the
sharing economy, the value of shared resources, which provide some
utility to other people, may increase substantially when there is a
socio-technical system to categorize and match supply with demand.
Such socio-technical systems (e.g., rating, ranking, search tokens,
feedback) would not take effect without a community in which leading
users can share common understandings of social and economic values,
and ensure there is a social cue to motivate users to participate in the
sharing practice (Foss, 2011). The markets have to be socially and
culturally embedded to be feasible because the subjective valuation of
goods can ensure the emergence of stable markets (Beckert, 2007,
2009). To some extent, the vision of SEPs (i.e., to be of value in society)
may depend on whether its economic activities are aligned with its CSV
by embedding virtue ethics and culture into SEP behaviour.
2.5. Competition
Beckert (2007, 2009) found that markets can emerge when
embeddedness has been found in non-economic social and political
contexts. Embeddedness literature recognizes that the market has never
been a utopian space of price-mediated competition, but is instead a
place where entry barriers, norms of production, even pricing tactics are
under the control of incumbent institutions. The change of entry bar­
riers, norms, and industrial relations are subject to the complicated
political negotiations between incumbent institutional players (Beckert,
2007, 2009). Notable examples of corporate strategy to tackle compe­
tition include those firms whose platforms gain competitive advantage
by embedding norms and rules to govern a controlled community of
value co-creators, and deny access from potential competitors by the
platform infrastructure. As a result, the niche value creation becomes
possible and not only because of its monopoly on any resource. In the
case of the competition between Microsoft and Netscape, Microsoft
created Internet Explorer and used its own existing platform (Windows
OS) to attract a relatively controlled community of value co-creators,
thus gaining a competitive advantage over Netscape Communicator.
Likewise, to compete with Nokia, Apple created the iOS platform and
invited potential creators to develop more applications based on the iOS.
As a consequence of tackling competition by governing a controlled
community of value co-creators, and denying access from potential
competitors by the platform infrastructure, SEPs are more capable of
creating competitive values and contributing to their online commu­
nities through developing social movements that embrace virtue ethics
and culture, and align them to gain practical and economic advantages.
2.6. Cooperation
The embeddedness theory in essence suggests that it is not just
economically rational but socio-culturally rational to develop regular
reciprocal relations with other stakeholders. The fact that actors are
embedded in community relations has been found to lead to favourable
conditions, notably interpersonal trust, social reputation, altruism,
empathy and fellowship, and common interpretive schemes for risk
perception, conducive to cooperative actions (Beckert, 2007, 2009). For
instance, the patterns of cooperative actions, which may be based on
religion, culture rural neighbourhoods, or other forms of community
life, are institutionalized to such an extent that they become legal
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Technological Forecasting & Social Change 169 (2021) 120804
arrangements of industrial production. Firms based in Silicon Valley
have achieved such benefits where technical know-how and human
have been shared through informal cooperative activities, including
local social networks, orchestrated by Stanford University and similar
institutional nexuses, as well as through the homogenous local culture of
tech entrepreneurialism, and informal socializing (Kenney, 2000;
Saxenian, 1995). Likewise, the access to institutional resources is criti­
cally important for SEPs to legitimize their sharing practices. Through
an ecosystem lens, SEPs should make more effort to tackle the cooper­
ation problem by collaborating with their ecosystem stakeholders.
The following table presents the whole conceptual framework
(Table II).
3. Methodology
To explore how to make SEP innovation sustainable through CSV by
embedding virtue ethics and culture, we chose to create multiple case
studies (Yin, 2014) primarily based in two sectors: the bike-sharing and
ride-sharing sectors. We followed two criteria for choosing the repre­
sentative cases (Table III).
First, the samples should be of leading firms in representative in­
dustries of the sharing economy. DiDi belongs to the sharing ride sector,
and OFO is from sharing bike sector. Second, we need to ensure access to
target research samples so as to achieve a comprehensive view of the
samples and the industries involved. We conducted semi-structured and
in-depth unstructured interviews with OFO and DiDi managers in
different departments, along with platform users, and other relevant
ecosystem stakeholders including economists, rivals (e.g., Mobike, Uber
China, Dida1), governments and so forth.
DiDi was founded in 2012 and became the largest platform in China’s
peer-to-peer sharing ride market after merging with Kuaidi in February
2015 and acquiring Uber China in August 2016. OFO sharing bicycles,
cofounded by five Peking University graduates in 2014, is a younger
online travel platform which was created to solve the problem of how to
complete the “last kilometer” of a trip where public transport could not.
For the consumers who want to use the sharing bikes, they need only
take a few seconds to scan the QR code on the bike and then use a
password to unlock it. Since June 2015, OFO has added more than 10
million sharing bikes to the market, and at least 200 million customers
have enjoyed more than 4 billion rides with OFO.
Drawing from Gibbert et al. (2010), the validity and reliability of
choosing a case study can be demonstrated in four main aspects: internal
validity, external validity, construct validity, and reliability. From an
ecosystem perspective, we construct the conceptual framework through
the literature to ensure the internal validity of the study. We also follow
a cross-case analysis method to compare not only the two major sharing
companies, DiDi and OFO, but also to supplement our data and materials
with those of industry competitors so as to further ensure external val­
idity. Finally, to ensure construct validity and reliability, the data was
collected from 2014 to 2018 based on the principle of data triangulation
(Gibbert et al., 2010; Yin, 2014), including both interview and archival
data. We specify the process of data collection, including how the data
was collected, the reliability of the data, and the data triangulation.
First-hand data was collected directly from interviews with high-
level managers, starting in 2014. We visited DiDi and OFO on several
occasions from November 2014 to July 2018, conducting in-depth in­
terviews with company executives, including co-founders, the chief data
officer and chief economist. The time period of the interviews covered
the rise to maturity of China’s sharing ride and sharing bike industries,
allowing us to gain insight into the sharing economy at all three stages of
its development, from the Community, the Scaling-up, and the Legiti­
mation. We designed targeted interview questions relating to how DiDi
1
Dida is another Chinese sharing ride platform which is in competition with
DiDi; its official website is http://www.didachuxing.com/homepage/.
K. Rong et al. Technological Forecasting & Social Change 169 (2021) 120804

Table II
The conceptual framework.
Value Competition Cooperation Creating Shared Value (CSV)

Community • Describe the goods or service
Stage that become available via
sharing platforms. How are
the meanings of goods or
services being framed?
• What is the value proposition
as a small community with
shared visions, norms, and
rules?
• Explain why the valuation
process is a social process.
Scaling-up • Explain why the value of
Stage goods or service increase as
the platform expands its user
base.
Legitimation • Explain the institutional
Stage process of legitimating the
new goods or service offered
by the sharing platforms.
• How do sharing platforms offer not
just value to users, but also better
values to users?
• How are the impacts of
community networks or social
movements embedded in them
understood to be differentiating
from other competitors?
• Explain why platforms use
financing war and price war as
competition tactics.
• Are there other feasible tactics?
• Explain why a sharing platform
that adheres to the social, cultural,
and institutional norms of Chinese
society tends to perform better in
competition.
• How do sharing platforms rule out
the possibility of low quality,
opportunism, and asymmetry of
information problems?
• How do community networks or
social movement campaigns
address these problems?
• How do larger scale sharing
platforms address the problems of
low quality, opportunism, and
asymmetry of information?
• Explain why gaining legitimacy
(rule-making, ethical standards)
helps to deal with the problems of
low quality, opportunism, and
asymmetry of information.
• To co-create with key stakeholders and
provide platform users with shared
social values of competitive differenti­
ation by embedding virtue ethics.
• To co-create with key stakeholders and
provide platform users with the main
shared economic values by embedding
local consumption culture.
• To co-create with key ecosystem
stakeholders and provide platform
users with the shared social and eco­
nomic values by embedding virtue
ethics and culture in order to achieve
legitimacy.

Table III
Interview list.
Category Stage 1Community Stage 2Scaling-up Stage 3Legitimation Total Total
hours interviewees

DiDi Case Project manager Economist (4 hours) CDO (2 hours) 25.5 24

(2 hours) VP of public affairs (2 hours) PR director and manager (4
4 Drivers (2.5 hours) PR manager (2 hours) hours)
2 Users (1 hour) 4 drivers (2 hours) 3 drivers (1.5 hours)
2 users (1 hour) 3 users (1.5 hours)
OFO Case Co-founder (2 hours; 2-hour Director of operation manager 2 PR managers (2 hours) 17.5 13
workshop) (2 hours) VP of development
2 Users (1 hour) Supply chain manager (4 hours half-day workshop)
(2-hour workshop) 2 users (1 hour)
3 users (1.5 hours)
Mobike Main Rival of Director of North China (2hours) Meituan manager (2 hours) 6 3
OFO Meituan strategy officer
(2 hours)
Uber China Main Rival of Uber Shanghai Manager Uber China team engineer (3 Uber Greater China Policy 15 5
DiDi (4 hours) hours) director (4 hours)
Uber Greater China Policy Uber Greater China Policy director
director (2 hours) (2 hours)
DiDa Main Rival of DiDa Founder, CTO 5 1
DiDi (4-hour workshop and 1-hour
personal meeting)
Government Regulation Government agency Officer 4 2
(half-day workshop in Beijing) (2-hour workshop in Beijing)
Total 73 48

and OFO co-evolved CSV and supplemented the interviews with on-site
visits and online communications with employees to continuously track
the two companies’ historic development. Overall, we conducted a total
of 24 interviews over 25.5 hours with DiDi, and a total of 13 interviews
over 17.5 hours with OFO. To corroborate the data obtained in these
interviews, we also conducted interviews with DiDi and OFO’s industry
rivals Mobike, Uber China, and DiDa to ensure the reliability of the
findings.
Second-hand data was mainly elicited from news outlets (about 60
pages), interview videos (over 2 hours), the reports from companies and
research institutes (over 150 pages), and regulation documents from
government websites (about 70 pages). The third source of data came
from ecosystem partners, including competitors (e.g., Dida, Uber China,
Mobike), users, suppliers, employees, and government officers. Then we
followed a detailed data analysis processincluding a single case analysis,
a cross-case analysis, and data triangulation (Miles and Huberman,
1994; Ozcan and Eisenhardt, 2009).
As regards the single case analysis, we started by investigating the
historic and development activities of each individual case through data
collection via interview (Eisenhardt, 1989). Two of our co-authors
organized the recordings of each interview into slides, which we used
to have an in-depth discussion to collate the important quotes, devel­
opment timelines and key milestones for each case. After discussion, we
merged the materials and developed a case roadmap for both DiDi and
OFO. We then started to match the summarized development timeline of
each case to the three development stages of SEPs according to our
framework. We placed into the Community stage all corporate strategies
or behaviours used to embed the platform virtue ethics into the original
platform business model. We identified the business model innovation
strategies that drive platform expansion and economic value creation,
but which might also bring with them the expense of virtue ethics as the
Scaling-up stage. Finally, any other strategies to balance the economic
value creation and virtue ethics were categorized under the Legitimation
stage. In doing so, we could then elaborate the story of each case ac­
cording to the three development stages of SEPs.
During the process of cross-case analysis, we attempted to identify

5
K. Rong et al.
and summarize some common characteristics of the chosen cases from
the perspective of the three coordination problems that SEPs may
encounter during the process of co-creating shared values. Then we re-
processed the interview materials based on the three coordination
problems (i.e., value, competition, and cooperation). We then compiled
the information into a table to compare and summarize different plat­
forms’ strategies in each stage and each coordination problem (Miles
and Huberman, 1994). In the table, we set out the quotes relating to
platform strategies from different cases in order to search for potential
regularity of the business model logic of SEPs and better relate the
theory to the data (Eisenhardt and Graebner, 2007). Moreover, we
highlighted the similarities and differences in SEPs’ behaviour in each of
the stages when facing different coordination problems in order to
iterate between the theory and data to summarize some general prac­
tices illustrating why SEPs would better co-create shared value by
embedded virtues.
In the data triangulation stage, we first conducted another nine in­
terviews from the industry competitors of DiDi and OFO to further verify
whether the findings from the cross-case analysis complement other case
tests. In this stage, we also developed timelines of each case by using the
case materials from those interviewees. Again, we organized and
collated these competitors’ materials according to our theory framework
to verify whether our propositions still worked. Lastly, we manually
coded all second-hand data from various sources including news, in­
dustry reports, and related regulation documents as further supportive
evidence.
4. Findings
The case study mainly shows findings that respond to questions
raised in the conceptual framework. According to one economist we
interviewed, he believes that the sharing economy model (i.e., the sep­
aration of ownership and use of idle resources) can contribute to
improving people’s living standards. In the following, we present find­
ings that demonstrate how our target SEP samples co-create shared
values with key stakeholders.
4.1. Community stage
In the Community stage, genesis communities in both cases
contribute to the formation of virtue ethics of platforms, where common
practices unfold as well. As such, SEPs’ social and economic values can
be mutually transformed. This stage reflects the characteristic of
embeddedness on SEPs.
Inspired by rush hours in Beijing, DiDi recognized the difficulties of
hailing a taxi in the big cities in China, and began its peer-to-peer
sharing ride business in 2013. Now DiDi successfully links surplus
vehicle resources with customers who need to take a ride, and is
expanding its business into foreign markets. DiDi’s project manager
recalled,
“The initial reason for us to establish DiDi platform was that cus­
tomers always found it hard to call a taxi in the large cities such as
Beijing. The advanced digital technology gave us the opportunity to
research and to develop a platform which linked the vacant surplus
car resources and needs of customers together, and then we explored
the possibility to establish a sharing ride market in China.”
In early 2015, Uber seemed to have some unsurpassed competitive
advantages, such as better applications and more stable technology. To
build a genesis community in the sharing economy context, the forma­
tion of virtue ethics is crucial. DiDi defined its core virtue ethics as in­
dependence and sociability, because individuals can choose to
participate or not. It built an incompact community in which users can
even switch their identity between a passenger and a driver, which
greatly increases the values in the community. At that time, the genesis
6
Technological Forecasting & Social Change 169 (2021) 120804
community consisted of the founders, the off-line sales team, and a
minority of taxi drivers. They shared the common practice of the sharing
ride and the vision that state-of-the-art technology would disrupt and
innovate the traditional way of travelling. The first drivers to join the
platform stated,
“We hold the belief that the peer-to-peer sharing ride will replace
traditional taxis, because sharing ride represents advanced technol­
ogy and convenience.”
The traditional taxi service faced complaints from both customers
and drivers. Customers were not satisfied because of a series of prob­
lems, such as regular rejection, detours, and overcharging. And drivers’
complaints generally involved high gas prices, traffic jams, and high fees
to be paid to taxi companies. The genesis community held the view that
the peer-to-peer sharing app would change the situation dramatically.
In the early stages, very few taxi drivers were willing to use DiDi’s
mobile app and the majority insisted on making transactions through
taxi companies. Apart from subjective reasons, such as the lack of
smartphones, the key problem was the low quality of DiDi’s early
version of the app, which was outsourced to external technology com­
panies. On this note, the CDO recalled that,
“There was nothing more important than launching the app at that
time.”
After all, there were dozens of venture firms competing in the sharing
ride industry. By introducing professional technicians and accepting
constant feedback from the first drivers, the technical team of DiDi
iterated their app rapidly, usually once a week, improving its usability.
DiDi’s project manager for Beijing stated:
“Firstly, our products provide a better customer experience. Sec­
ondly, the offline sales team works efficiently and thus occupies the
market quickly. The person-to-person promotes increasing influence
among drivers.”
The positive interaction between users and improvements in the app
and algorithm helped to embed the social values into the platform’s
economic value. A growing group of drivers, passengers, and their social
networks joined the expanding community. Though most of them live
distant and distinct lives from each other, they adhere to the DiDi
community’s implicit and explicit rules and expectations, and shared
common virtue ethics about independence and sociability. The genesis
community contributed to the development of a new kind of social
custom centering around the use of online sharing ride services rather
than taking a taxi.
As for OFO, the vision of its genesis community was clearer from the
outset. The five initial founders were all members of Peking University
Cycling Association and were brought together by their vision of
completing journeys by bicycle. Since its inception, OFO founders have
clearly stated their vision of enabling people to have access to bicycles at
any time and any place. One of the co-founders stated during the
interview meeting:
“We hold the view we can satisfy people’s ‘last-kilometer’ needs by
connecting bicycles to our platform, and therefore promote the habit
of cycling all over the world.”
OFO’s business model also contributes to alleviating traffic conges­
tion and reducing environmental pollution by replacing cars with bikes
for short trips. Wei Dai, the principal founder and CEO of OFO, bought
200 bikes to put into circulation at the Peking University campus in June
2015, and invited students to link their bikes to the OFO platform in
exchange for the right to use all bikes on the platform. In October 2015,
there were 4,000 daily rides on the platform at Peking University. The
founders and loyal users in Peking University constituted the genesis
community of OFO, who shared common virtues about sustainability
and civic virtue. All in all, users have no ownership rights over bikes on
K. Rong et al.
the platform, and thus civic virtue and cooperative spirit play a signif­
icant role in embedding the OFO business model. The social value
created by embedding the sharing virtue ethics and the cycling habit
into the economic value can accomplish positive mutual change via
SEPs. By lowering the consumption threshold and differentiating the
service level, the platform attracts a growing number of users and ac­
cumulates increasing shared economic values as well.
However, unlike the traditional economy, the market mechanism of
value creation in SEPs heavily relies on the network externality (i.e.,
indirect network effect), meaning that the growing community plays a
core part in the sustainability of SEPs. Based on members’ (i.e., drivers’
and customers’) feedback, the iteration of products and the algorithm is
crucial for a platform to enlarge its user base. A co-founder of OFO
mentioned how,
“Our products’ iteration is rapid, for instance, we design and put the
new bikes into use twice a month.”
In addition, the Uber CEO, Travis Kalanick, defined the sharing
economy as one specific form of on-demand economy whereby pas­
sengers can call a car whenever they need it and drivers open the app
when they are ready for work and close the app when they finish work.
He believes that the value of Uber is mainly about independence. On
balance, SEPs in the two sectors need to co-create the shared values with
key ecosystem stakeholders and meanwhile their business models
should be embedded with virtue ethics.
4.2. Scaling-up stage
In the Scaling-up stage, SEPs pursue the maximized expansion of the
user base. The majority of SEPs are driven by the business model
innovation, which can be easily imitated, and therefore price and
financing wars become the dominating approach to competition.
Consequently, most of the SEPs in this stage are preoccupied by price
and financing wars while paying little attention to their virtues, visions,
and even daily business operations. It is in this stage that SEPs experi­
ence dis-embeddedness. In such a context, firms’ social value would
experience a shrinkage.
From January 2014 to August 2016, DiDi witnessed a period of rapid
growth in users and its price and financing wars with Kuaidi and Uber
escalated. Consequently, DiDi became the largest platform in the Chi­
nese peer-to-peer sharing ride market. The larger scale of its enterprise
linked more drivers and passengers, and its larger scale of data signifi­
cantly increased the accuracy of its algorithm and dispatch, which also
assisted in dealing with the problems of low quality, opportunism, and
asymmetry of information.
At the beginning of 2014, in order to increase the payment interface,
Tencent, one of the biggest Internet firms, allowed passengers to pay on
the DiDi platform via Wechat (Pay), one of the biggest mobile payment
services and social platforms in China. In February 2015, DiDi and
Kuaidi merged after the long price war, and then faced direct competi­
tion from Uber. In May 2015, Cheng Wei, the CEO of DiDi, declared he
would offer a subsidy of 1 billion Yuan to DiDi and invest 100 million
dollars in Lyft to begin the price war with Uber. The VP of public affairs
of DiDi told us:
“It seemed like there were no alternative competition tactics for us,
except for subsidy and financing war. Even till now, we always adopt
these two methods to compete with Uber in different markets. “
That is almost exactly what the Uber Shanghai manager said. Until
June 2016, to win the war against Uber, DiDi had obtained more than
8.5 billion dollars of investment from Apple, Tencent, and other com­
panies. Accordingly, Uber, including Uber China, obtained 9.4 billion
dollars. On 1 August 2016, DiDi acquired Uber China, and only then did
the price and financing war in China finally end, but the war on market
occupation between Uber and DiDi continued in the overseas markets.
7
Technological Forecasting & Social Change 169 (2021) 120804
Why did Uber lose the Chinese market? To respond to this question,
we may have to look at the impacts of Chinese social, cultural, and
institutional norms. The sharing economy platform that better adapts to
local culture and norms tend to perform better. Take the competition
between Uber China and DiDi as an example. People in big cities in
China are accustomed to mobile payment methods, such as Alipay or
Wechat Pay. DiDi naturally chose the mobile payment method, while
Uber insisted on using credit cards initially, which Chinese people are
not in the habit of using. Further, the customer service at Uber was
conducted by e-mails while DiDi’s was mainly processed by phone. Most
Chinese people care more about time and working efficiencies, and
therefore are not used to using and checking e-mails. At this stage, DiDi
created economic values by lowering the price for passengers and
increasing drivers’ income. Concerning shared social value, DiDi
decreased cross-side uncertainties for drivers and passengers, and cut
down resource wastage thanks to the increasingly precise algorithm. The
rapid growth of sharing ride businesses also propelled the alteration and
improvement of legal institutional development.
Likewise, OFO were engaged in financing and price wars with its
opponents. From October 2016 to March 2018, OFO and Mobike were in
a financing war in which around 20 investment institutions took part
and spent about 2.5 billion dollars. Before the war, there were dozens of
sharing bike platform firms, but no more than five survived.
The price war in the industry of sharing bikes was much fiercer and
went beyond expectations. OFO adopted the strategy of low-cost prod­
ucts and high-renewal frequency, while another leading company,
Mobike, designed high-quality and high-cost products with low renewal
frequency. To address the low-cost product challenge from OFO, Mobike
decided to launch a new low-cost bicycle named Lite to compete with
OFO, while OFO also learnt from Mobike in terms of digital lock and
location technology. The sharing bike platforms converged into almost
the same type, which resulted in it all being down to pricing to win the
war.
Due to massive subsidies, users of sharing bike platforms experienced
exponential growth. An increasing number of commuters developed the
habit of using sharing bikes to travel the “last kilometer”. Out of all the
sharing bike firms, only five main platforms survived the pricing war, of
which OFO and Mobike are the biggest two. Therefore, in the Scaling-up
stage, SEPs may have to sacrifice some values through dis-embedding
virtue ethics, but they must ensure that their business model is
embedded within local culture (e.g., consumption habits). Moreover,
SEPs in this stage have to collaborate with key stakeholders (e.g.,
economist, investor) at an ecosystem level in order to maintain their
market position in fierce price or finance wars so as to create maximized
economic values. As for Mobike, the cofounder said he is committed to
pursuing a differential competition strategy and launching a high-tech
smart bike.
4.3. Legitimation stage
In the Legitimation stage, SEPs realize there’s often a conflict when
creating more economic value at the cost of virtue ethics, or vice versa. A
balance between social value and economic value should be regained.
Pressure from stakeholders, social supervision, and official regulation
promote the legitimation procedure quite significantly. SEPs in this
stage should attempt to operate as value-added service providers and
support an open-system, or so-called business ecosystem, with clear
internal rules, and proactive cooperation and interactions with external
partners.
As discussed above, the legitimacy of SEPs comes from the commu­
nity, social supervision, and official regulation. A community consists of
members, including users, investors, suppliers and employers, who
share common practices. Internal rules within a community ensure the
efficiency of the “feedback and revision” process. Feedback from tradi­
tional or new media, social network comments, and face-to-face feed­
back from the public can have a direct influence on SEPs’ reputation and
K. Rong et al. Technological Forecasting & Social Change 169 (2021) 120804

their internal regulations, which encourages management to take social “Take ‘tide phenomenon’ as an example: OFO can hire workers to re-
welfare into consideration. During this process, laws and regulations schedule the allocation of bikes in different periods of the day to
created by central and local legislators and government put direct provide sharing service more efficiently.”
constraint on SEPs’ operation. Appropriate official regulations can co­
With stable demand coming from sharing bike firms, upstream bi­
ordinate benefits from diverse social classes and parties, and therefore
cycle manufactures could also stabilize their employment and reduce
can adjust the social welfare distribution to ensure it is fairly distributed,
waste. Thirdly, the innovative and convenient business model enabled
and make sure that the economic and social value created by SEPs is
firms to rapidly bolster their reputation. To sum up, OFO embedded
delivered to a wider social group.
enlarged economic and social values into its products and business
After the second stage, DiDi achieved almost monopoly status in the
model, which both helped OFO achieve legitimacy.
sharing ride market, and naturally received attention from multiple
Another source of legitimacy for OFO was external pressures from
social classes (i.e., community, social supervision, official regulation).
public opinion and official regulations. It encountered problems around
However, DiDi did not deal well with the issue of legitimacy in the
the safety of riders and the deposit scheme during its development. In
beginning. With the desire for worldwide market occupation and profit,
Shanghai, an 11-year-old boy was in a traffic accident and died while
it neglected its virtues and pursued radical development. Then it
riding an OFO bike, which highlighted the absence of a complete safety
encountered more challenges in several respects, such as the implicit
system for OFO bikes. After the accident, OFO immediately paid
algorithm, the civil and criminal cases, the workload of drivers, and
compensation and improved its safety system which prevented children
exorbitant price premium during extreme weather, which hurt DiDi’s
under 12 years from riding a sharing bike.
reputation and legality. In addition, there were several sexual harass­
Another important problem it faced was cash deposits. OFO required
ment and criminal cases in DiDi’s hitchhiking business. In May 2017, the
an initial cash deposit of 99 Yuan and a further 199 Yuan after use. But
Ministry of Transport of China proposed a series of regulations with
the problem was that the platform did not own the deposit. The Ministry
regard to the peer-to-peer car sharing industry, including how drivers on
of Transport claimed that the sharing bike platforms had to set up a
the platform must have a local Hukou (resident certificate) and local
separate deposit account for that sole purpose, and they could not
vehicle licensing. The PR manager told us:
transfer customers’ cash deposits into other usages. Similar to the case of
“The policy had a tremendous impact on us. Many drivers on the DiDi, the process of appropriately dealing with external pressures
platform were not locals. But in order to operate legally, we had to endowed OFO with legitimacy. The government can now use the tag
clear all the non-local drivers by December 31st, 2018. However, it is “bike friendly” as an index for evaluating the quality of a city. “Bicycle
very very difficult. One possible solution for us was to cooperate with friendly” means that people in that city are willing to go out as opposed
local car rental companies. They had the certificates…” to staying in and understand the concept of environmental protection,
which also means that the city has good air quality.
Following two serious criminal cases for the platform, in September
All in all, in the Legitimation stage, SEPs in the two sectors must co-
2018, the Ministry of Transport and Ministry of Public Security made a
create the shared social and economic values by embedding virtue ethics
comprehensive safety inspection tour of DiDi, which was followed by
and consumption culture with key ecosystem stakeholders. To summa­
tougher measures. Among other edicts, DiDi was required to fold its
rize all the cases we used in the three stages, we give the summary of our
hitchhiking business, remove unqualified drivers and cars, and install a
case study in Table IV.
one-button alarm function on its app.
Faced with problems and critiques from various social classes, DiDi
5. Discussion and conclusion
itself also instigated a series of rectifications to ensure the safety of
passengers, especially for those who need to take cars at night, including
Mobike’s Co-founder said in a media interview that “it is an unrea­
making personal information only accessible to passengers, cancelling
sonable behavior for shared bicycles not to aim for profit”. Also, the nature
all the tags linked to passengers, removing the comment function for
of CSV is largely aligned with Acquier et al.’s (2019) suggestion about
messages from drivers to passengers, and improving the call-handling
the promise of SEPs in the aspects of sustainability or shared-value
capacity of customer services. During the process of dealing with
creation. Moreover, SEPs need to co-create shared values with all rele­
external pressures from the media, social networking, and official reg­
vant ecosystem partners. Parente et al. (2019) point out that ecosystems
ulations, DiDi obtained its legitimacy step by step.
refer to all relevant stakeholders that keep evolving while customers’
In the case of OFO, its legitimacy originated from the social value it
consumption preferences change and related technology advances. In
created and external pressures about safety and cash pledge problems.
addition, Leung et al. (2019) have attested that the ecosystem of the
From April 2018, OFO and Mobike wound down their free riding ac­
sharing economy in China is not yet in a mature shape. Therefore, in this
tivities and increased the price of monthly cards since the sharing ride
article, we argue that SEPs should co-create shared values with key
was almost an oligopoly market. As for social values, there were three
ecosystem partners so as to build a collaborative system for value
clear aspects associated with the business model. Firstly, taking sharing
co-creations. And this can be considered as a sustainable development
bikes to nearby places or completing the “last kilometer” to work or
activity for SEPs which is related to identifying needs, sharing values,
home became a habit for citizens in dozens of cities, and therefore a
and contributing to further growth.
sustainable lifestyle was popularized because of the sharing bikes. A PR
As mentioned, the CSR is mainly about considering the business in­
manager of OFO said that,
fluence on the local communities and environment, but the CSV tends to
“Urban travel by bike sharing can be considered as green travel and focus on the business growth as well as valuable contributions to local
bike sharing should be considered as a kind of public good that can communities (Gatley, 2016). According to the narrative findings above,
make up the deficiencies of the existing urban transportation we come back to the questions raised in the conceptual analysis
infrastructure.” framework (as seen in Table II). In the Community stage, SEPs originate
from some form of genesis communities, with a well-defined set of
Secondly, sharing bikes have a certain demand for off-line mainte­ common practices (or sharing culture), from which virtue ethics
nance workers to better relocate the bikes so that they increase develop. Then sample SEPs’ visions (i.e., value propositions) are created
deployment opportunities for some special communities and reduced as the byproduct of those members of genesis communities aim to
products and resource waste. The VP of OFO told us during the work­ achieve a higher standard of excellence. To be specific, the common
shop in Beijing: practice inspired by the virtue ethics lays the foundation for platform
and product iteration. Then their business experiences constant growth

8
K. Rong et al. Technological Forecasting & Social Change 169 (2021) 120804

Table IV
Summary of case study.
Value Competition Cooperation

Community DiDiGenesis community: OFOGenesis community: DiDi and OFOThe competitive advantages DiDi and OFO
Stage Founders; off-line sales team; a Bike share clubs in of DiDi/OFO in its early stage come from the
minority of driversForms of PKUForms of practices: features of its user community: 1 Because their business initially operated in
practices: a small embedded community, the
1 Bikes pooling; 1 Users of ethical and social concerns – it coordination problems of low quality,
1 Cars pooling; 2 Promoting the vision of resembles more of a social movement than matching, and opportunisms can be
2 Reputation/ranking/rating bike sharing (future a business idea effectively tackled due to the existence of
scheme; urbanism) 2 Quality and influence of initial users social mechanisms (i.e. reputation, trust,
3 Promoting the vision of ride Goods and services (value): 3 The priority of virtue/solidarity/social fine-grained information sharing, and col­
sharing (future urbanism) Flexibility; new job networks over economic value extraction lective problem-solving etc.)
Goods and services (value): opportunities; sustainability; 4 The nature of saving resources or 2 Because DiDi and OFO are part of the
Cheaper ride; safe and low risk; forming a cycling habit increasing efficiency social movement to promote ride/bike
income for drivers; new job 5 Universities are similar to small sharing, there is a substantial amount of
opportunities; flexibility acquaintance societies effort in its networks that can be counted
as volunteering and peer production.
DiDi and OFO
Ride/bike share as social movement:
Vision; agenda of social change; key actors and key ally
Ride/bike share as business strategy:
Value propositions; risk control via social capital; value capture
Scaling-up DiDi and OFO DiDi and OFO DiDi and OFO
Stage The value–virtue tension rises as there is an increasing economic Price war and financing war: Different strategic responses to the problems
return on the platform scaling up both consumers and suppliers of Because of the loss of community sense and of low quality, lack of trust, and decline of
services. ethical motivations, most users become more social capital:
sensitive to price. Accumulating data is used to the increase
This situation gets worse when more accuracy of user portrait, algorithm, and
competitors join in and offer similar services dispatch.
at a cheaper price. Platform owners supply the service directly
To finance the price war firms need to attract to mass consumers in order to maintain high
more investment. quality of service.
Platform owners introduce sophisticated
rating mechanisms to prevent opportunism
and anti-social behaviour.
Legitimation DiDi and OFO DiDi and OFO DiDi and OFOWith clear rules, defined legal
Stage When the ride/bike sharing sector becomes a status, and government regulations, platform
1 Legitimacy of sharing economy firms comes from the newly defined and legitimized industry, companies turn to the dynamics of
community, social supervision and official regulations. more players join the competition by offering community spirits and social movements in
2 With clear rules, defined legal status and government similar but differentiated services. order to generate competitive advantages.
regulations, the number of drivers and customers increases, Competitive advantages for DiDi/OFO at this DiDi/OFO did these things in order to convert
offering greater value propositions in both price and quality. stage stems from its visionary leadership on social virtues to business values:
3 Third-party service providers are allowed to join the business the future evolution of this sector, offering
ecosystem to further expand the value horizons. consultation services to the government 1 General trust in its network.
4 A shift of sharing ethics from serving the community to serving regulators, and setting a good example in 2 Promoting sharing culture and the
the whole society, i.e., innovating for urban sustainability complying with the external institutional ideology of sharing for other economic
future. pressures of society. sectors.
5 Becoming a mission-oriented platform business. 3 More sophisticated governance
mechanisms via data analytics and
artificial intelligence.

which benefits from improving the user experience by means of product
iteration, while an increase in the number of users further encourages
the growth of the community and accelerates the iteration. A virtuous
cycle between virtue construction and business expansion emerges.
Existing literature (e.g., Nadeem and Al-lmamy, 2020) also proves that
the relationship between companies and consumers influences the lat­
ter’s intentions of co-creating values. Although ethics are critically
important in forming and maintaining long-lasting relationships
(Gundlach and Murphy, 1993), few scholars have attempted to inves­
tigate the extent to which ethics determine value creations in the sharing
economy (Nadeem and Al-lmamy, 2020). Thus, our first proposition can
be reached:
Proposition 1. To achieve value upgrading in the Community stage, SEPs
should co-create the shared social values by embedding virtue ethics in key
ecosystem partners.
In the Scaling-up stage, there was a trend of dis-embedding since
both SEPs focused on winning the financing and price wars against their
rivals while neglecting the core virtues they were built on. The imbal­
ance between “virtue” and “value” lead to inefficiencies in CSV, which is
reflected in resource waste and unprofitability caused by aggressive
competition. Provided that most of the SEPs were the results of business
model innovation rather than technological innovation, the majority of
them would not have protective barriers with which to prevent other
competitors from entering, and thereafter price and financing wars
naturally become the dominating competition method in most cases.
Due to the characteristics of the platform economy, the value created by
the genesis communities has been easily magnified, expanded, and
scaled up into the wider society, where most of the new users are mere
consumers of the newly created values. Therefore, the economic value
that platforms created for stakeholders expands rapidly, except to
investors.
In the context of a sharing economy, more attention should be paid to
the linkage between customers’ consumption behaviours and firms’
socially responsible activities (Jeon et al., 2020). The CSV is concerned
about the relationship between firms’ strategy characteristics regarding
their sustainable competitive advantage and their social behavior (Kang
and Na, 2020). In short, the core essence of the sharing economy can be
understood as one consumption culture producing community values to
be shared by many people, rather than individual ownership. To some
extent, consumers are encouraged to consider the impact of their con­
sumption via community-oriented perspectives. In this context,

9
K. Rong et al.
sharing-economy companies can cooperate with consumers to satisfy
their consumption preferences, which eventually realize the purpose of
value co-creations. SEPs are able to maintain competitive positions
because they co-create more great values than their rivals. For instance,
Autonavi in 2017 launched the Easy Travel platform, which connects a
group of car sharing and bike sharing companies including DiDi,
Mobike, and OFO, and means that Autonavi has upgraded itself from a
navigation tool to a mainstream travel platform. This leads us to our
second proposition, as follows:
Proposition 2. To maintain a competitive position in the Scaling-up stage,
SEPs should co-create shared economic values by embedding local con­
sumption culture with key ecosystem partners.
The growing popularity of SEPs cannot be explained from the
transaction-cost lens alone, but also has to be accepted and understood
in the social context in which the digital sharing platforms are perceived
as more legitimized (Belk, 2010). In the Legitimation stage, after scaling
up from a local club to a national marketplace via technological ap­
proaches, SEPs face the dilemma of creating more value at the cost of
virtue (sharing culture), or vice versa. Moreover, laws and regulations
were necessary to achieve legitimacy, for which “virtue” constituted a
solid safeguard against social criticism. Once the two SEPs acquired
legitimacy, they owned the “moat” to reduce competition, t effectively
expanding employment, saving resources, and making profits. From the
perspective of business strategy, such a balance is beyond the traditional
consideration of balancing business strategy with CSR, because the most
innovative point of the sharing economy is in creating synergies between
community social benefits and the general value-creation and
value-capture of the wider economy. The main benefits of such institu­
tionalization can be seen in the diversity of “species” as value-added
service providers. As such, it is necessary to seek formal institutional
resources to legitimize the sharing practices and convert them from
cultural dispositions (“soft power”) into institutional frameworks (i.e.,
rule by law, or “hard power”). To address current problems and issues in
the sharing economy, collaboration among ecosystem stakeholders such
as platforms, partners, and government is absolutely imperative (Leung
et al., 2019). Moreover, the positive social embeddedness (including
culture and cognition) can contribute to the acquisition of organization
legitimacy and sustainable development (Fan et al., 2019). Conse­
quently, the third proposition can be established:
Proposition 3. To achieve legitimacy in the Legitimation stage, SEPs
should co-create shared values and economic values by embedding virtue
ethics and local consumption culture with key ecosystem partners.
6. Research implications
Extant literature has discussed in depth the benefits of the sharing
economy (Botsman and Rogers, 2010), but scant research concerns the
relevant ethical and legitimacy issues (Hwang, 2019). The research
mainly contributes to the sharing economy literature through refining
the CSV concept in order to sustain SEP innovation.
First, the research complements the existing sharing economy liter­
ature on SEPs. Unlike asset-light transaction platforms (e.g., eBay,
Expedia), bike sharing and ride sharing platforms are not completely
digital businesses because, while their payment transaction is digital,
the service delivery is physical, offline. During this process, a sharing
economy platform can embrace social value and transform it into eco­
nomic value creation, and thus the business naturally generates positive
externalities associated with sustainable development.
Second, our research goes beyond the discussion on SEPs’ CSR
practices, with particular attention on the co-evolving CSV activities of
SEPs. Being consistent with Nadeem et al.’s (2020) finding, we also find
that social support affects the value co-creation activities of SEPs. From
our observations of two leading SEPs in China, there is a clear finding
that social relations – from the mutual trust and community ethics to the
10
Technological Forecasting & Social Change 169 (2021) 120804
institutionalization at a later stage – are essential for facilitating the
interaction of social value and economic value via SEPs. In other words,
embeddedness appears as a balance between the strategic consider­
ations of “virtue ethics” and “value” in SEPs, constituting the basis of
CSV.
Third, this article improves our understanding of the rise of Chinese
SEPs by shedding light on the evolutions of their CSV activities. An EMS
scheme manager from the British Assessment Bureau argued that com­
panies need to take CSV into account more because it would better
ensure business success in the coming 20 or 30 years (Gatley, 2016). We
also argue that the sharing economy has huge potential to have a great
deal of positive social impact in China. The Chinese government has the
power to practically legitimize SEPs since the growth of the sharing
economy contributes to the integral service industry. Our findings sug­
gest that the Polanyian framework of economy as embedded in society
has offered a fruitful theoretical lens to explain the growth of SEPs in
China for the first time.
7. Practical implications
This study also has some practical implications for SEPs and the
relevant stakeholders, including industry institutions and governments.
First, regarding SEPs, given that virtue ethics are the basis of value
creation and accumulation, they should clarify their virtues and visions
in the genesis community, and propagate them into a growing com­
munity through explicit internal rules. Second, alternative measures on
competition or diversified competition advantages should be explored to
avoid the waste of resources in the Scaling-up stage. Even though firms
choose financing or price wars, they cannot do so to the detriment of
their own business operations and virtue ethics must continue to be
embedded in social relations to create both social values and economic
values. Third, Hwang (2019) suggests that how to deal with legitimacy
can be seen as one of the most challenging issues. SEPs should also notice
that the appropriate treatment and response to external pressure is
conducive to its legitimation, and it is not an obstacle for market
occupation or expansion. Last but not least, this article proposes that
SEPs should actively build their own industry ecosystem or embed
themselves in related industry ecosystems so as to retain and enlarge a
pool of social resources for achieving legitimacy and sustaining
innovation.
For governments, regulations are powerful measures to reduce
resource waste and help platform firms achieve legitimacy. As for cur­
rent SEPs, business models can be easily replicated. However, a market
cannot accommodate so many duplicative and redundant similar firms.
When financing and price wars become the main trends for competition
and market occupation methods, they may bring down an innovative
and sustainable business resulting in the enormous waste of capital and
other resources. To some extent, the government has to shoulder some
supervision responsibilities in this process to ensure that the competition
itself is fair and to further curtail resource waste, as well as to achieve
platform antitrust. It is the process of introducing official regulations
that makes sharing social practices legitimate. Also, SEPs need to
maintain good relationships with local governments and follow relevant
regulations so as to reach long-term viability (Mi and Coffman, 2019).
8. Research limitations and future research
Our research is not without limitations. Data were collected from
OFO and DiDi, which may not be representative of SEPs in all other
sectors, nor of sharing bike or sharing ride platforms in general in other
countries. Moreover, another limitation is that the paper is focused on
the Chinese market alone. Therefore, it is recommended that future
research should examine a wider variety of SEPs in different sectors and
in different countries, which may generate additional insights into how
SEPs remain competitive and sustainable through CSV by embedded
virtue ethics.
K. Rong et al.
Additionally, due to the limitation of argument, this article does not
go inside the “blackbox” of digital platforms, but we show how the
digital salience of sharable goods or services can create value as an
alternative arrangement to market or hierarchy. Benkler (2002) pro­
vides a set of promising concepts (i.e., modularity, granularity of com­
ponents, and the cost of integration), which can be potentially
instrumental in analyzing the unique institutional mechanisms of gov­
erning the resources of SEPs that are partly public (the digital platform)
and partly privately owned (the physical goods/services). Future
research needs to shed light on the hybrid feature of sharable goods as
both collective and private ownership to explore the strategic implica­
tions of platform firms dealing with such a unique common pool of
sharable resources.
Future research also needs to pay attention to the institutional con­
sequences of the digital materiality of the sharing economy as they
become comprehensive governance mechanisms (Kallinikos, et al.,
2013), and seek to explain how digital representations connect value
creations with the sharing ethics of community users. Despite these
limitations, our research provides a starting point in studying a
contentious but important and researchable topic about the co-evolving
CSV activities of SEPs.
Author statement
We also declare that there is no conflict of interesting. This article
does not contain any studies with human or animals performed by any of
authors.
Acknowledgement
This research is supported by the National Natural Science Founda­
tion of China (Grant no. 71872098;71834006), Major Research Projects
of Philosophy and Social Sciences of the Ministry of Education
(No.17JZD018), Major Program of National Social Science Foundation
(Grant No. 20&ZD075; Grant No.18ZDA149), Big data and intelligent
governance Lab open project, and the International Postdoctoral Ex­
change Fellowship Program, National Postdoctoral Management Com­
mittee, China.
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Dr. Ke Rong is an associate professor in the Institute of Economics, School of Social Sci­
ence at Tsinghua University in China. Ke has received the Ph.D. degree from University of
Cambridge and obtained Bachelor degree in Tsinghua University. Before joining Tsinghua,
he was a senior lecturer in the University of Exeter and Bournemouth University in UK and
a visiting scholar in the Harvard Business School. His research interests include Platform
Market in Sharing Economy, and Business/Innovation Ecosystems. He also served as the
editorial board member in leading strategic management journal- Long Range Planning.
His research has been published in J. International Business Studies, International J.
Production Economics, J. International Management, Group and Organization Manage­
ment and Technological Forecasting and Social Change. His email is r@tsinghua.edu.cn.
Dr.Boyi LI is a fellow in management in the Information Systems and Innovation Group,
Department of Management LSE. He is interested in ICTs for global development. He works
on the relational approach to social innovation, and empirically studies the movements of
creative economy and sustainable practices in developing context. Boyi currently teaches
the theoretical foundations of information systems, Innovating Organizational IT, and
Research Design for MISDI programs.
Miss Wan Peng is a Ph.D. student in London School of Economics and Political Science in
UK. Her research interests are Global Governance and International Political Economy.
Mr. Di Zhou is a Ph.D. student in the Institute of Economics, School of Social Sciences at
Tsinghua University in China. His research interests are Platform Economy and Business
Ecosystem.
Dr. Xinwei Shi is a post-doc in the Institute of Economics, School of Social Science at
Tsinghua University in China. His research interests are Platform Economy and Interna­
tional Business. His research has been published in J. Business Research. His Email is
xinweishi@mail.tsinghua.edu.cn