Incumbents and business model innovation for the sharing economy: implications for sustainability

Abstract

In addition to fostering the rise of new players in various sectors, the sharing economy has attracted the attention of established companies, the so-called ‘incumbents’. Some incumbents have joined the sharing economy to both reap its emerging opportunities and tackle newcomers' competition. The entry of incumbents comes at a time in which the sharing economy, still in its initial stages, is the ‘battlefield’ between actors defending its original sustainability promise, based on the efficient use of resources, social bonding, non-monetized relationships and power of the communities, and those supporting the need to compromise on the principles, to ensure the sharing economy's expansion. Given incumbents' size and power, their entry is likely to significantly affect the shape of the sharing economy. Our study explores the implications for environmental, social and economic value creation of the different ways in which incumbents are changing their existing business models to join the sharing economy. We develop a typology of business model innovation for sharing, which stems from the literature on sustainable business models in particular, and present illustrative cases of incumbents' entry in the sharing economy. For every type adopted by incumbents, the sustainability dimensions are subsequently explored, considering both the benefits and drawbacks of incumbents' entry in the sharing economy. The final section concludes, and discusses implications for research, practice and policy.