Evaluating Sustainability of Sharing Economy Business Models

Abstract

Decreased consumer trust, increased unemployment rate, increased availability of technology for hosting an online market drives the growth of sharing economy. The sharing economy provides an ideal lens to explore and contribute to the sustainable development nature. While the sharing economy can contribute to sustainable development and has plenty of room to develop practical issues in driving sustainability there is a lack of sharing economy sustainability empirical studies. This article seeks to provide an approach how to address and estimate sharing economy business models sustainability. This approach aims to determine key sustainability perspectives by using Circles of Sustainability. Key sustainability perspectives have been taken as input to estimate the level of sustainability. This practice can be served as a useful methodology to support decisions toward to sharing economy business models sustainability transition.

Full text

Procedia - Social and Behavioral Sciences 213 ( 2015 ) 836 – 841
Available online at www.sciencedirect.com
1877-0428 © 2015 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of Kaunas University of Technology, School of Economics and Business
doi: 10.1016/j.sbspro.2015.11.486
ScienceDirect
20th International Scientific Conference Economics and Management - 2015 (ICEM-2015)
Evaluating Sustainability of Sharing Economy Business Models
$VWD'DXQRULHQơ
a,
*, Aura DrakšDLWơ
b
, Vytautas Snieška
c
, Gitana Valodkienơ
d
a,b,c,d
Kaunas University of Technology, School of Economics and Business, K. Donelaicio str. 73, LT-44239, Kaunas, Lithuania
Abstract
Decreased consumer trust, increased unemployment rate, increased availability of technology for hosting an online market drives
the growth of sharing economy. The sharing economy provides an ideal lens to explore and contribute to the sustainable
development nature. While the sharing economy can contribute to sustainable development and has plenty of room to develop
practical issues in driving sustainability there is a lack of sharing economy sustainability empirical studies. This article seeks to
provide an approach how to address and estimate sharing economy business models sustainability. This approach aims to
determine key sustainability perspectives by using Circles of Sustainability. Key sustainability perspectives have been taken as
input to estimate the level of sustainability. This practice can be served as a useful methodology to support decisions toward to
sharing economy business models sustainability transition.
© 2015 The Authors. Published by Elsevier Ltd.
Peer-review under responsibility of Kaunas University of Technology, School of Economics and Business.
Keywords: Sharing economy; Trade business models; Circles of Sustainability.
Introduction
Sharing different goods, services among different organizations and customers has started to play an important
role in today's economic environment. The sharing economy is a term for an emerging set of business models,
platforms and exchanges (Alen & Berg, 2014). While in traditional market money taken to gain ownership of a
product, sharing economy framework presents the benefit of capturing value with temporary access-rights to a
product or service. Redistribution, mutualization, shared mobility, peer-to-peer platforms enable customers to access
organization owned property or competencies. Value of sharing economy business models could be explained by
creating a utility between a certain resource owner and a customer in need of that resource, at the right time and
* Corresponding author. Tel.: +370-652-87394.
E-mail address: asta.daunoriene@ktu.lt
© 2015 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of Kaunas University of Technology, School of Economics and Business

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Asta Daunorienė et al. / Procedia - Social and Behavioral Sciences 213 ( 2015 ) 836 – 841
against reasonable transaction costs (Business Innovation Observatory, 2013). Due to fundamentally different way
of creating and capturing value, the sharing concept benefits are: sustainable use of resources, flexible employment
options for contractors, bottom-up self-regulating mechanisms, lower overheads leading to lower prices for
consumers, and more closely tailored and customised products for users (Allen & Berg, 2014).
Changing economic environment as well as growing interest in sharing economy influenced organizations the
need to analyse not only customer needs, but also to keep in mind how to receive value from providing new
products and services in a more sustainable way (Hoskisson et all, 2000; Peng, Wang, & Jiang, 2008; Wright et all.,
2005). The sharing concept oblige organizations to find innovative solutions today thinking about the tomorrow‘s
problems. Beyond environmental issues, the sharing economy raises hopes and concerns of an economic and social
aspect (Demailly & Novel, 2014) which are close to the concept of sustainable development as an alternative to
understand and restore the equilibria between economic, social and environmental issues. Along with generality of
the sharing economy and sustainable development aspects opens up a new research field of the sharing economy
sustainability issues. Accordingly the aim of this paper is to find out the main perspectives for estimation business
models sustainability in the context of a sharing economy. In order to address this research question, this paper
integrates logical and systematic analysis of scientific papers. To evaluate sustainable development perspectives of
sharing economy business models article authors adapt Circles of Sustainability and conclude with some reflections
from the case study.
1. Theoretical background
1.1. Definitions of sharing economy
Academic literature has not proposed a great number of definitions for the term of sharing economy. In general
terms, sharing economy definitions are not contradictory in nature but evolutionary, as the definition of the concept
is taking shape with the level of inclusivity and variety in scope (Allen & Berg, 2014). Benkler (2004) describes
sharing concept as reciprocal benevolence based on social behavior. Similarly, Belk (2007) describes the concept of
sharing which embodies the property distribution process to others for a limited amount of time without getting legal
rights for that property. “Sharing is an alternative to the private ownership that is emphasized in both marketplace
exchange and gift giving. In sharing, two or more people may enjoy the benefits (or costs) that flow from possessing
a thing” (Belk 2007:127). The unambiguous of these definitions implies that sharing construct includes several
components from economics point of view: to balance the available resources and needs of consumers.
Along this line of thought, sharing economy is one of the terms that have been incorporated in the economics
area. Zervas, Proserpio & Byers (2015) state, sharing economy are concepts intertwined in a context of business
value. Sharing economy refers to economic issues and goes beyond renting goods at lower costs, or with lower
transactional overhead, than buying or renting through a traditional provider (Zervas, Proserpio & Byers, 2015). The
work of Orsi (2013) enhanced theoretical insights in the sharing economy area. In general, Orsi (2013) state, “the
sharing economy is the response to the legacy economy where we tend to be reliant on resources from outside of our
communities, and where the work we do and the purchases we make mostly generate wealth for people outside of
our communities”. Gansky (2010) shows an important customers role in sharing economy. Gansky (2010)
co
ntributions had considered the effects of customers’ benevolence factors such as recognition of reliable stuff,
spaces, skills, time, and land – all which can be shared and monetized. John (2013) into the sharing economy
concept incorporates social aspects. Author states, sharing economy is the proper space to make money with a
relevant factor of participation. Finley (2013) maintains the core of the sharing economy movement lies within
capturing this idling capacity and redistributing it. While these definitions are important in terms of understanding
sharing economy form economic and social point of view Demailly & Novel (2014) points out the environmental
benefit. Authors emphasized the need to increase the usage duration of the products by ensuring that they are used to
their full technical potential.
Despite addressed different viewpoints, a sharing economy is a blueprint of a future business idea that explains
how to link economic, environmental and social issues.

838 Asta Daunorienė et al. / Procedia - Social and Behavioral Sciences 213 ( 2015 ) 836 – 841
1.2. Sharing economy business models
While the scientific literature on business models shows a variety of approaches it is rarely defined distinctly.
Zott et all (2011) studied academic journal articles and showed that 1177 scientific articles discussed the idea of
business model. For example Kinderis (2012) proposes that in many cases business model is perceived and analyzed
as a simplified issue, which shows the value creation logic of business enterprises. Rappa (2003) defines a business
model as the method of generating revenue by which a company can sustain itself. Teece (2010) argue that the
essence of a business model is in defining the manner by which the enterprise delivers value to customers, entices
customers to pay for value, and converts those payments to profit. Other definitions of business models emphasize
the concept of the business model as an abstract comprehensive approach or the type of the organization value
stream (Mahadevan, 2000; Linder and Cantrell, 2000). Although there is no general agreed accepted business model
definition, common to all of these definitions is that business model creates a heuristic logic of organization
capabilities with the realization of economic value.
Even though the concept of business model is potentially relevant to all companies very few publications can be
found in the literature that discusses the issue of sharing economy business models. The term sharing economy
generally refers to “sharing goods” and includes redistribution, mutualisation and shared mobility (Demailly &
Novel, 2014) and any companies that carry out sharing transactions over the peer-to-peer systems (Cho et al., 1998).
Model
s of redistribution include all types of goods at varied intensities, large numbers of users who rent products for
ex
tended periods before recovering and reusing them. Mutualization models encompass an easily lend products
assortment, for e.g. books, DVDs and DIY tools. Shared mobility models shares individual cars through car sharing
or carpooling systems. Peer-to-peer systems via direct digital network shares resources among individual systems.
T
hese systems are distributed without any centralized control or hierarchical organization, in which each node runs
software with equivalent functionality (Stoica et al., 2003).
So far as a coherent framework of business models of the sharing economy exists, it did not grow out of the great
systems, but out of the sustainability characteristic and potential as inputs and converts them through customers and
markets into economic outputs nowadays.
1.3. Sustainability drivers of sharing economy
As
sharing economy business models will change over time due to changing customers’ requirements, changing
markets, technologies, structures and etc. it will be recognized as a part of sharing economy driven by separate
sustainability drivers: social drivers, economic drivers, environmental and technological drivers (Owyang, 2013;
Demailly & Novel, 2014).
Generally economic sustainability includes adequate and stable economic growth requirements, such as financial
stability, preservation, low and stable inflation rates, innovation investments and encompass fair distribution of
natural resources between the global society, of the present and the future time, requires harmonization of economic
activities anGHFRV\VWHPVEDVHGRQWKHSURGXFWLYLW\DQGFDSLWDOVXEVWLWXWDELOLW\WKHRU\ýLHJLV=HLHQLnjWơ
The sharing economy business models economic sustainability drivers are based on the power of income toward
access over ownership (Demailly & Novel, 2014).
The importance of social responsibility has been pointed out by the importance of the society structure. Social
responsibility reflects the relationship between developments and dominated social norms and seeks to develop
social stability systems. Social drivers based on growing population and necessity of saving resources drives sharing
economy business models to analyze alternative consumer behaviors. It also fosters small type changes based on
neighbors and local communities.
Every aspect of the growing sharing economy business models has been affected by the growing technology
importance. Botsman and Rogers (2010) state, the increasing ubiquity of social networking and real time
technologies is the most impactful feature driving the sharing economy. Diagnosis of customers’ needs using online
technology is giving much benefit in “deliver highly targeted, very personal goods and services at the right time and
location (Gansky, 2010: 3)”.

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Asta Daunorienė et al. / Procedia - Social and Behavioral Sciences 213 ( 2015 ) 836 – 841
Environmental drivers of sharing economy depend on several conditions that are highly specific to each business
model. Firstly, sharing economy environmental sustainability focuses on the stability of biological and physical
systems. Secondly, sharing economy environmental sustainability emerges the reduction of the produced goods in
order to drive sustainable consumption modes they are associated with. “The quality of the shared good appears to
be a key requirement for the environmental sustainability of sharing business models, whether for redistribution,
mutualization, peer-to-peer systems or even shared mobility (Demailly & Novel, 2014:8)”.
T
hese insights provide basic understanding of sharing economy business sustainability, especially of the
interaction of the fourth drivers. They are helpful in raising sustainability importance of sharing economy business
models. However, adding value to the sharing economy business models sustainability requires more objective
indicators in order to measure the level of sustainability and making decisions toward to sharing economy business
models sustainability transition.
2. The proposed framework
The major drawback of sharing economy business models sustainability approach is that sustainability cannot be
precisely defined because of the sustainable development term which refers to a dynamic process from one
condition towards another. However sustainability evaluation could be described as “a process by which the
implications of an initiative on sustainability are evaluated, where the initiative can be a proposed or existing policy,
plan, programme, project, piece of legislation, or a current practice or activity” (Pope, Annandale & Morrison-
Saunders, 2004:595).
Research b
ackground was created by the analysis of the Global Compact Cities Programme “Circles of
Sustainability” and scientific articles. Identified sharing economy sustainable development perspectives are shown
in table 1.
Table 1. Sharing economy sustainable development perspectives
Sustainability
area
Definition Perspectives References
Economy The economic is defined as an organizational domain that
emphasizes the practices, discourses, and material expressions
associated with the production, use, and management of resources
(adapted from Circles of Sustainability, 2011:9).
Production and Resourcing;
Exchange and Transfer;
Accounting ; Consumption and
Use; Labour and Welfare;
I
nfrastructure; Wealth and
D
istribution
Circles of
Sustainability
(2011)
Environment The ecological is defined as an organizational domain that
emphasizes the practices, discourses, and material expressions that
occur across the intersection between the organizational and the
natural realms (adapted from Circles of Sustainability, 2011: 10).
Materials and Energy; Water and
Ai
r ; Built-Form and Transport;
Emission and Waste
Cir
cles of
Sustainability
(2011)
Society The social is defined as an organizational domain that emphasizes
the practices discourses, and material expressions associated with the
formal and informal processes; systems; structures; and relationships
actively support the capacity of current and future generations to
create healthy and liveable communities (adapted from McKenzie,
2004:12,13)
Social equity; Health equity;
Community development; Social
s
upport; Human rights; Labor
ri
ghts; Social responsibility;
Social justice; Social integration;
Cultural competence; Human
ada
ptation
Omann &
Spangenberg
(2002);
James et all
(2015).
Technology The technological is define as an organizational domain that support
and enhance a “good life” for all of its employees, customers and
society as well without compromising the Earth’s ecosystem or the
prospects of later generations (adapted from Vergragt, 2006:7).
Intermediate; Progressive;
Alternative ;Light-capital; Labor-
intensive; Indigenous; Low-cost
;Soft; Liberatory
A
kubue
(2000)
Sharing economy sustainable development perspectives suggest the use of perspectives to measure sharing
economy business models performance in economics, environmental, social and technological areas. The main
question how sustainable are the following perspectives is in company, asks for critical judgement on a nine-point
scale of sustainability from critical sustainability to vibrant sustainability. Value 1 means “critical” sustainability
that requires urgent change in order to be assured of continuing viability, value 2 is “bad”, value 3 is “highly

840 Asta Daunorienė et al. / Procedia - Social and Behavioral Sciences 213 ( 2015 ) 836 – 841
unsatisfactory” and corresponds to poor practice. The mid-point (4 – “satisfactory –“, 5 – “satisfactory”, 6 –
“satisfactory +”, 7 – “highly satisfactory”, 8 – “good”) signifies a level of sustainability that allows for a basic
equilibrium. “Vibrant” sustainability (9) means a highest level of sustainability that is company active in
reproducing vibrant economic, environmental social and technological conditions for long term positive viability.
Evaluation of sharing economy sustainable development perspectives allows finding out real evidences of
sustainable development practices. It provides feedback and monitoring in relation to used practices and successful
outcomes. 9 point scale supports a reporting process, including a graphic presentation of the sustainability of a
company. Limitation of this evaluation is the absence to compare different practice and achieved level of
sustainability with other organizations. Nevertheless this is an opportunity for a future research.
3. Illustrative application
The case study approach which was employed for this research included fourth sustainability areas, to determine
a sustainability level of shared economy business model. There was evaluated sustainability level of peer-to-peer
Company in Lithuania. Peer-to-peer Company was chosen primarily because it had a successful approach to sell,
buy and swap clothes. Over past eight years, the company helps for registered members to communicate directly
through created online platform. This company also has the features of a social networking service.
Fig. 1. Peer-to-peer clothes selling, buying and swapping company’s sustainability perspectives profile
In order to evaluate level of sustainability peer-to-peer clothes selling, buying and swapping company was
designed a worksheet based on sustainability perspectives (see 1 table). Data was conducted in discussion with
company experts, then analyzing the external information sources, for example articles, press messages, debate
forums.
Peer-to-peer clothes selling, buying and swapping company’s sustainability profile template presented in 1 figure.
Each of these figures represents a qualitative assessment by company experts of the sustainability perspectives.
Peer-to-peer clothes selling, buying and swapping company’s sustainability profile is almost highly satisfactory.
Environmental and technology perspectives areas need improvement in supporting national producers. However
technology area is quite difficult to concern because of the national production quality level. Sustainability results
suggest if a company, by implementing more sustainable development practice, can achieve a high level of
sustainability.
Conclusions
The study of sharing economy sustainable development perspectives has focused on sharing economy business
models. The potential benefit of sharing economy in the field of sustainability has been concerned through

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Asta Daunorienė et al. / Procedia - Social and Behavioral Sciences 213 ( 2015 ) 836 – 841
sustainable development, sharing economy, management literature analysis. There has been little attempt to
integrate these aspects.
This paper has described a case study of the occurrence of sustainable development perspectives in a peer-to-peer
clothes selling, buying and swapping company. The mid-point level of sustainability was determined. As the
li
mitations of this study, it did not shows sustainability levels of the sharing economy business models classified by
type. As for future research, a research with more various case studies are expected to be carried out.
There is a Cohen & Kietzmann (2014) held assumption that sharing economy has the potential to change global
and local economies toward sustainability. The results of the literature and case study appear to support this
assumption.
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