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The Business Model Concept and the Sharing Economy

An Overview

Written by Mark Fenzel

Paper category

Master Thesis

Subject

Business Administration>Communication & Media

Year

2018

Abstract

Master Thesis: Business model theory 2.1 Business model concept The business model concept mainly appeared during the emergence of the Internet in the mid-1990s. For Teece (2010), the business model consists of the financial and organizational structure of the business. In addition, Teece (2010) wrote: "The essence of the business model is to define the way companies deliver value to customers, induce customers to pay for value, and convert these payments into profits.". According to Wirtz, B. W. et al. (2016) Three different schools can be found in the academic literature, technology-oriented, organizational theory-oriented, and strategic-oriented2. In the appendix you can see an overview of selected publications categorized according to their direction. Amit and Zott (2001, 2011) studied the concept of business models from all three perspectives and provided general definitions based on the understanding of different management theories and their contributions to the concept of business models. They define a business model as "the content, structure, and governance of transactions aimed at creating value through the development of business opportunities." They expanded their definition to conceptualize the company's business model as "a system of interdependent activities that transcends the focal company and crosses its boundaries"3. By definition, the content of the transaction is related to the product, service, or information being exchanged, as well as the resources and capabilities required for the exchange. Transaction structure refers to the participants involved in the transaction and the way of contact between them. It also includes the order in which exchanges are processed, and the exchange mechanism used to enable transactions. And transaction governance refers to the way relevant participants control the flow of information, resources, products and services. In addition, governance also involves the legal form of the organization and the incentives for transaction participants45. In subsequent publications, Amit and Zott (2010) referred to content, structure, and governance as design elements of a business model6. In addition, Amit and Zott (2001) identified four sources of e-commerce value creation in their empirical research. They are efficiency, complementarity, lock-in and novelty. Efficiency is related to the transaction efficiency of a company, that is, the lower the transaction cost, the higher its value contribution, such as search cost or simplicity. When the value generated by a package of products or services is higher than its personal value, there are complementary products or services, such as binding offline and online services or activities. 3 The sharing economy Airbnb and Uber are the most frequently cited examples of the so-called "sharing economy." The increasing popularity of the Internet has promoted the development of sharing platforms and communities based on reducing transaction costs. Mobile applications enable more immediate information exchange. 18. Theory and research are still in their early stages and publications. Compared with business model concepts, there are few empirical studies. 3.1 Collaborative consumption and sharing economy In the literature, the sharing economy is also referred to as collaborative consumption 19, access-based consumption 20 or gig economy, on-demand, peer or platform economy 21. According to the literature, these terms do not describe the same phenomenon. Bardhi and Eckhardt (2012) argue that in terms of perceived ownership, access and sharing are different from each other, that is, consumers only gain access to the objects they use. Although Möhlmann (2015) defines collaborative consumption as "[..] occurs in an organized system or network, participants share activities in the form of leasing, lending, trading, bartering, and exchanging goods, services, and transportation solutions. , Space, or money" 22. Based on the work of Belk (2014), Möhlmann (2015) believes that “collaborative consumption lies between the traditional form of sharing in the family background and the usual market exchange activities.”. The evolving discussion surrounding the definition of sharing, collaboration, and access-based consumption centered only on the concept of ownership. Although the sharing of private assets may be new, the rental market for products such as cars, hotel rooms, holiday homes, and services such as accounting or car repair has been around for a long time23. Based on the overview24 provided by the business model toolbox, the system of the sharing economy can be described as follows: The traditional leasing market is based on two-way transactions, while in the sharing economy, these transactions become three-way transactions. In most shared markets, there is a platform that brings buyers and sellers together, collects and processes payments, and provides a recommendation system that allows buyers and sellers to market and rate shared assets in a transparent manner 26. Möhlmann (2015 ) Developed a framework to determine the determinants of sharing options. The author identified ten variables that affect satisfaction with sharing options and the likelihood of re-selecting sharing options. The variables are community, sense of belonging, cost savings, environmental impact, familiarity, Internet capabilities, service quality, smartphone capabilities, trend affinity, trust, and utility. The empirical research conducted by Möhlmann (2015) shows that respondents seem to be mainly served their own interests for reasonable reasons, that is, to use a service that can help them save money, and that the service is characterized by high practicality. Read Less