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Why do people engage in collaborative consumption?

March 10, 2018 485772ed Leave a comment

Collaborative consumption is a large scale trend which involves millions of users and constitutes a profitable business model for many companies to invest in (Botsman and Rogers, 2010). It is often associated with the sharing economy and takes place in organized systems or networks, in which participants conduct sharing activities in the form of renting, lending, trading, bartering, and swapping of goods, services, transportation solutions, space, or money (based on Owyang et al., 2014; Belk, 2014; Bardhi and Eckhardt, 2012; Botsman and Rogers, 2010; Chen, 2009).

Despite the rising importance of collaborative consumption, there is not much knowledge on why users engage in collaborative activities nor why many people are still reluctant to participate in this emerging trend. To address this gap, Möhlmann, in his paper “Collaborative Consumption: Determinants of Satisfaction and the Likelihood of Using a Sharing Economy Option Again” (2015), adopts a holistic approach to study the determinants of the usage of collaborative consumption services, providing empirical evidence from both business-to-consumer (B2C) and consumer-to-consumer (C2C) settings. As a matter of fact, collaborative consumption might refer to both B2C services, such as commercial car sharing, or C2C sharing in the form of redistribution markets or collaborative lifestyles (Bardhi and Eckhardt, 2012; Botsman and Rogers, 2010; Mont, 2004), such as accommodation sharing marketplaces. While nowadays users of sharing services can mainly be found among young age groups, the future generation will be growing up with this trend (Möhlmann, 2015).

Möhlmann (2015) analyzes ten factors that are expected to have an effect on the variable satisfaction with a sharing option, which itself has an effect on the likelihood of choosing a sharing option again. These ten determinants are: community belonging, cost savings, environmental impact, familiarity, internet capability, service quality, smartphone capability, trend affinity, trust, and utility (see Figure 1). The hypotheses of the paper suppose that each determinant has a positive effect on the two dependent variables, with satisfaction with a sharing option also having a positive impact on the likelihood to use a sharing option again. The empirical analysis was conducted on two different collaborative consumption services, specifically the B2C car sharing service car2go (study 1) and the C2C accommodation sharing service Airbnb (study 2). Two independent quantitative online studies were rolled out in July 2014, distributing questionnaires via a mailing list to students of the University of Hamburg (Germany) by a research laboratory.

The findings (see Table 1) show that respondents seem to predominantly be driven by rational reasons, serving their self-benefit, when using collaborative consumption services. Users pay attention to the fact that collaborative consumption helps them to save money and that respective service is characterized by a high utility, in a way that it well substitutes a non-sharing option. In addition, familiarity with a service was found to be an important determinant, probably because it lowers transaction costs of getting to know the specifics of the sharing process (Henning-Thurau et al., 2007). Furthermore, both studies reveal the important role of trust as an essential determinant of the satisfaction with a sharing option. This is an interesting result because trust has not been analyzed in relation to other determinants in the context of collaborative consumption in quantitative studies so far (Möhlmann, 2015). Some differences are also present in the two studies, specifically, in study 1 (B2C car sharing context car2go), two additional determinants with significant effects were identified: community belonging and service quality. While in study 2 (C2C accommodation sharing context Airbnb), a relationship between the satisfaction with a sharing option and the variable likelihood of choosing a sharing option again was estimated. This relationship was not revealed in study 1.

The main strength of this paper is that it is both academically and managerially relevant. Academically speaking, the results of this study contribute to close a research gap and hold valuable implications for researchers. Findings indicate that indeed there are many similarities among the determinants of the use of different collaborative consumption services. However, a detailed analysis might also reveal context or industry specifics, as shown in this paper. While for managers of B2C and C2C collaborative consumption services, the results of this paper offer important and relevant insights for the acquisition but also retention of customers. Managers of B2C and C2C services should adapt their market activities to respond to the fact that rational and self-centred determinants were found to be essential, including utility, cost savings, and familiarity. Furthermore, managers need to make sure that trust building measures are implemented and communicated to respective stakeholders.

This paper is also subject to a number of limitations. Firstly, even though it is true that collaborative consumption services are mainly used by a young age group, the fact that approximately 88% of the respondents were under the age of 30 does not provide true generalizability of the results. Especially considering that collaborative consumption is a growing trend that will soon involve people of any age group, a more heterogeneous sample should have been utilized. Secondly, it is likely that interrelations among determinants exist, which is something that has not been studied here. For example, it seems straightforward that determinants such as cost saving and utility, or familiarity and trend affinity might be correlated. Future research should construct a more comprehensive research model also considering such interdependencies. Thirdly, one of the most significant determinants in the analysis was utility, however, such variable showed low values of Cronbach alpha, respectively 0.57 in study 1 and 0.60 in study 2. Considering that the generally accepted cut-off is that alpha should be 0.70 or higher for a set of items to be considered a scale (Garson, 2012), the internal consistency of such variable is very poor. This undermines the reliability of the significant relationship between utility and the two dependent variables. Future studies should therefore create surveys which construct the utility variable in a different way. Lastly, in this paper, only the likelihood of using a sharing option again was investigated, but not actual behaviour. A more comprehensive and reliable analysis should consider the real behaviour of users. Longitudinal studies or experimental designs can be used in future research in order to address this issue.

To conclude, it can be said that there are without doubt several determinants which can affect satisfaction with collaborative consumption services and the likelihood of choosing such services again. Future studies might consider various additional determinants such as, for example, burden of ownership (ownership is usually associated with responsibility and effort), process risk (sharing can involve procedural risks), or product variety (sharing offers a wide range of different products and services). The list goes on as the relevant causal factors can be numerous. So what other determinants do you believe to be crucial in explaining user engagement in collaborative consumption?

References

Bardhi, F., & Eckhardt, G. M. (2012). Access-based consumption: The case of car sharing. Journal of consumer research, 39(4), 881-898.

Belk, R. (2014). You are what you can access: Sharing and collaborative consumption online. Journal of Business Research, 67(8), 1595-1600.

Botsman, R., & Rogers, R. (2011). What’s mine is yours: how collaborative consumption is changing the way we live.

Chen, Y. (2008). Possession and access: Consumer desires and value perceptions regarding contemporary art collection and exhibit visits. Journal of Consumer Research, 35(6), 925-940.

Garson, G. D. (2012). Testing statistical assumptions. Asheboro, NC: Statistical Associates Publishing.

Hennig-Thurau, T., Henning, V., & Sattler, H. (2007). Consumer file sharing of motion pictures. Journal of Marketing, 71(4), 1-18.

Möhlmann, M. (2015). Collaborative consumption: determinants of satisfaction and the likelihood of using a sharing economy option again. Journal of Consumer Behaviour, 14(3), 193-207.

Mont, O. (2004). Institutionalisation of sustainable consumption patterns based on shared use. Ecological economics, 50(1-2), 135-153.

Owyang, J., Samuel, A., & Grenville, A. (2014). Sharing is the new buying: How to win in the collaborative economy. Vision Critical/Crowd Companies.

Business Case

NASA: Crowdsourcing the Universe

February 12, 2018 485772ed Leave a comment

NASA has always been considered a symbol of scientific progress. Its task, the study of the universe, is without doubt something that requires a lot of work, from all of us. NASA is aware of this and has taken one of its first steps into its own new frontier: Crowdsourcing. Since 2011, NASA has been using crowdsourcing to help them solve some of the problems that arise on the International Space Station (ISS), from coming up with solutions regarding the difficulties of astronauts exercising in space, to searching for new planets. All these crowdsourced initiatives, framed as challenges, draw people from all over the world, and to date, more than a dozen platforms exist to host the challenges.

In the past, NASA’s aversion to crowdsource has primarily been a result of its culture. NASA Senior Policy Advisor Amy Kaminski declared that “The greatest challenge the use of crowdsourcing methods at NASA has endured is in their relative newness and lack of familiarity within most of the agency. Scientists and engineers at NASA are used to particular ways of doing R&D, and this usually entails doing work within the agency or having it done by groups within academia or industry via grants, contracts, and cooperative agreements. Crowdsourcing involves opening up the R&D participant base, which introduces uncertainty even while opening new and exciting possibilities for finding solutions to problems of interest and accelerating research work”. However, NASA’s initial mental closure began to evolve with the arrival of both private space companies and the rapidly growing ambitions of politicians to reach the stars.

The New Crowdsourcing Frontier

In 2014, NASA Deputy Chief Technologist Jim Adams stated “NASA recognizes that crowdsourcing presents an extraordinary opportunity to inspire the development of transformative solutions by offering a means to engage with non-traditional sources of innovative ideas, all in a remarkably cost-effective way”. Adding to this, Steve Rader, Deputy Manager of the Centre of Excellence for Collaborative Innovation (CoECI) at NASA, explained “If you have large crowds of hundreds of thousands, or even millions of people in communities, it is likely that you actually have within those communities some very valuable high-skilled folks. The idea is that somebody who can solve your very difficult problem often does not have traditional experience”. In fact, a main reason why crowdsourcing works so well is that a lot of the time, solutions are found by people who do not have the same area of expertise as the problem.

Some of NASA’s biggest crowdsourcing initiatives were related to its desire to know more about the Solar System. For example, their lunar instruments crowdsourcing campaign focused on NASA’s desire to better understand the Moon. Similarly, its Mars campaign, aimed at college students, was designed to find resources on Mars. It started with the Mars Forum, which used IdeaScale’s technology to engage the crowd and develop ideas while answering questions. As it progressed, college students could build and submit their own robots that were able to autonomously perform mining tasks. These are just a few examples of the several crowdsourcing projects undertaken by NASA.

The last and still ongoing initiative, hosted by crowdsourcing program Zooniverse, is the hunt for Planet Nine – the large, mysterious body thought to lurk at the edge of our solar system –. Ordinary people have now joined the search, and they have made some very interesting findings. Through the project, dubbed “Planet 9 Search”, space enthusiasts and astronomers alike are given access to thousands of images taken by ANU’s SkyMapper telescope. Their task is to find anything that appears to move against the mostly motionless background of distant stars. In just three days, about 21,000 volunteers examined more than 100,000 images and classified more than 5 million objects. This is work that would have taken an astronomy PhD student four years, according to ANU astronomer Brad Tucker.

“Planet 9 Search” Project Advertisement

Why NASA Crowdsources

Crowdsourcing can reduce costs, speed up project timelines, tap into crowd intelligence and creativity, and engage citizens at all levels of corporate and government processes. Many large corporations such as Microsoft, GE, AT&T, eBay, IBM, Apple and Sun (West 2003) and government agencies such as NASA (Lakhani, 2013), are increasing investment in crowdsourced solutions to gain the potential value of crowdsourcing as an open innovation platform, to both drive cost efficiencies and overcome resource constraints. Specifically regarding NASA, one of the aspects that makes all of this possible is that, while solving most problems requires significant scientific knowledge, the problem itself requires minimal integration into NASA’s internal operations.

How NASA uses crowdsourcing is enlightening. It allows NASA to try several different ideas at once and sort through those that work and those that do not. If you give it a thought, NASA has the kind of challenge that would make any person cringe: Get humanity beyond the sphere of Earth and explore the universe. And as if this was not enough, it all has to be done on a budget entirely controlled by politicians. This often means they get only one opportunity at constructing something, and adding to the pressure, if that device fails, the lives of astronauts could be at risk. So crowdsourcing lets them look carefully at ideas, both conventional and unique, and lets them narrow it down to the ones that work. With respect to the intellectual property (IP) of such ideas, organizers of challenges will sometimes reserve all rights to the IP of the knowledge/technology generated from the competition and applicants are always encouraged to read the terms and conditions of a challenge.

NASA’s crowdsourcing efforts are not just about finding the best idea, but also getting some of the best talent the country has to offer. It is no secret government agencies can have trouble getting the best and brightest people, and these competitions offer a look at some of the finest minds out there. Moreover, in addition to the value of ideas and talent, announcing winners and prizes is often used as a promotional and marketing tool for the organization, as it provides “good news” stories to share on Social Media. Even participants that do not win may see an increased investment in the company as a result of feeling a part of the process.

Example Tweet (Space Apps is a NASA incubator innovation program)

From a contributor’s perspective, NASA’s crowdsourcing initiatives are appealing not only because of cash prizes, but also because they are designed towards building relationships with its contributors, possibly also offering some of them an employment contract at NASA. As teams compete not just for the cash purse, but also for the associated validation, prestige, and satisfaction that result from solving important problems, challenges can incentivize significant additional investment, leveraging the award’s impact. According to several contributors, the real reward is helping NASA solve a space/engineering problem and gaining critical thinking and skills that are highly sought by employers.

It is therefore clear that there is a lot other firms can learn from NASA’s crowdsourcing. It is much more than just a way to get external ideas: Innovation strategy can truly transform an organizational culture. As a matter of fact, to conclude, it can boldly be stated that crowdsourcing has been “one small step for its innovation strategy, one giant leap for NASA”.

References

“Crowdsourcing Innovation at NASA: Q&A with Amy Kaminski.” Dialogue Review (2017). Retrieved from http://dialoguereview.com/crowdsourcing-innovation-with-nasa-q-and-a/

Day, J. “How NASA is Crowdsourcing its Innovation Strategy.” Ideascale (2017). Retrieved from https://ideascale.com/24571/

Dodgson, L. “How to get involved with NASA: Crowdsourcing ideas for Mars houses, robots, and space poop.” Business Insider Nederland (2016). Retrieved from https://www.businessinsider.nl/how-to-get-involved-with-nasa-2016-11/?international=true&r=UK

Ford, Robert C., Brendan Richard, and Michael P. Ciuchta. “Crowdsourcing: A new way of employing non-employees?.” Business Horizons 58.4 (2015): 377-388.

“Implementation of Federal Prize Authority, Fiscal Year 2013 Progress Report.” (2014). Retrieved from https://obamawhitehouse.archives.gov/sites/default/files/fy2015_competes_prizes_report.pdf

Kaplan, S. “Citizen scientists may have located candidates for Planet Nine.” The Washington Post (2017). Retrieved from https://www.washingtonpost.com/news/speaking-of-science/wp/2017/04/04/citizen-scientists-may-have-located-candidates-for-planet-nine/?utm_term=.59d019290aa6

Lakhani, K. “The crowd as an innovation partner: Lessons from NASA, Harvard Medical School, and beyond.” Presentation at the TopCoder Roadshow, Johnson Space Center, Houston, TX (2013)

Pearson, D. “NASA’s Crowdsourcing Is Out Of This World.” (2015). Retrieved from https://smbp.uwaterloo.ca/2015/10/nasas-crowdsourcing-is-out-of-this-world/

“Problem Solving Approaches at NASA: Challenges, Prize Competitions, and Crowdsourcing.” Retrieved from https://www.nasa.gov/content/prizes-challenges-and-crowdsourcing-advance-nasa-s-mission-and-outreach

West, J. “How open is open enough?: Melding proprietary and open source platform strategies.” Research policy, 32.7 (2003): 1259-1285