Trust in the Sharing Economy. Can trust make or break a sharing enterprise?

Walter, Evelyn

Excerpt

platforms has changed patterns of consumer behaviour since they allow these two

parties to easily come together whenever and wherever they wish and conduct a trade

anytime and anywhere from a smart phone. Rachel Botsman, a pioneering author and

key advocate at the helm of the movement explained the genesis of the sharing

economy as follows: "For the first time in history, the age of networks and mobile

devices has created the efficiency and social glue to [enable] the sharing and exchange

of assets" (Conway, 2011).

Over the last decade the sharing economy has grown to include many

applications such as peer-to-peer lending, car sharing, accommodation pooling, and

labour redistribution. It encompasses a wide range of businesses and notably includes

Airbnb (which connects people who are looking for a place to stay with those who are

willing to make their homes or lodgings available for rent) and Uber (which connect

drivers and riders for car transportation services). In the international collaborative

economy there are now 17 billion-dollar companies with 60,000 employees (Koetsier,

2015). PricewaterhouseCoopers (pwc, 2015). reports that five key sharing sectors

travel, car sharing, finance, staffing, and music and video streaming have the

potential to increase global revenues to around $335 billion by 2025. Currently, 44% of

U.S. consumers are familiar with the sharing economy and 19% of consumers have

engaged in a sharing economy transaction, and these numbers will keep growing (pwc,

2015).

3. Trust in a business context

The above section has shown that collaborative consumption is a movement

based on the notion of sharing and redistributing physical and intangible resources that

is revolutionizing the way people consume. Before investigating trust in the particular

context of collaborative consumption, first I would like to look at trust in business

contexts.

3.1. Business-to-consumer trust

According to Moorman (1992), trust is a key determinant for the quality of any

sort of relationship, next to power, communication, and goal compatibility. In a business

context, B2C relationships heavily rely on trust among consumers. In order to achieve

trust, commercial brands employ a number of relationship marketers just to take on this

challenge (Fournier, Dobscha, & Mick, 1998). To identify how such a trust relationship

from a consumer in a brand is established, it is important to understand the distinction

between cognitive and affective dimensions of trust.

Cognitive trust is defined as "a customer's confidence or willingness to rely on a

service provider's competence and reliability" (Moorman et al., 1992, p. 315). This is

based on the awareness consumers have of a particular company (for example,

reputation). Affective trust, on the other hand, is the confidence placed in a partner on

the basis of feelings linked to care and concern showed by the other (Johnson &

Grayson, 2005). The prediction process of a customer in a specific brand or company is

influenced by its feelings. Based on this, there is a certain level of faith established,

which has a direct impact on the degree of dependency the consumer is willing to take.

Both the cognitive as the affective dimensions of trust are important when it comes to

understanding how trust is built in commercial B2C relationships.

4. Trust in the sharing economy

Establishing trust in the sharing economy seems to be a more complex process

compared to other more traditional trust-relationships (e.g. B2C). A customer who is

coming to a sharing platform to make purchases, does not only have to put trust in the

company/platform he is dealing with (B2C), he also has to trust the other customer he

is sharing a product or service with (consumer-to-consumer, or C2C). This means that

the consumer now has to have confidence in two different parties before doing a

transaction, both in the company and in other users.

4.1. Trust in the company

Literature in the previous section has shown that trust in business context

especially when it comes to B2C relationships can have both a cognitive as an

affective dimension. This is also applicable when it comes to sharing initiatives, since

new customers can have an assumption about a service based both on hard facts and

on feelings.

The cognitive trust components are also relevant for sharing companies. Cited

by Beldad et al. (2010) these are: (1) organisational reputation: for example, due to the

bad publicity around Airbnb following on the `orgy scandal', has this negatively

influenced its reputation? Also, (2) privacy assurance: how do collaborative

consumption services handle all the personal information of their customer base and

how extensive is their privacy policy? And as a third cognitive component, (3) third

party guarantees: to what extent do services have an official third party partnership?

Following on this, there are different affective trust components discussed,

mainly in the scope of customer service. Egger (2002) describes in his model (1)

provide mean of contact: do the services offer different possibilities to the customer to

reach them (for example, next to email also a telephone hotline in case of emergency).

Also, (2) responsiveness: when a customer needs help, within what timeframe he/she

can expect a reply? Furthermore, (3) quality of help: is there plenty of collaborative

thinking with the customer and are there good solutions offered if it is necessary? And

lastly, also in the light of affective trust but not as a specific customer service attribute,

(4) transparency of risk: do the sharing services alert the customers to the fact things

can actually go wrong?

Moreover, Beldad et al. (2010) discuss some website's usability aspects and

user-interface design components that, according to scientific literature, evoke trust. As

first, (1) perceived ease of use: do services offer a website or mobile application (app)

that is easy to use? And, (2) graphical characteristics: is the platform well-designed in

terms of graphical characteristics?

In addition, Beldad et al. (2010) discuss some website content components that

can generate trust. (1) Information quality: is there extensive information available on

the site and is everything covered? And, (2) social presence: Do the services make use

of real people (pictures, videos) so that a feeling of social presence is suggested (also

an affective dimension of trust). And lastly, (3) customised/personalised content: is the

content customised to user's own preferences or based on their location?

4.2. Trust in other consumers

One of the largest European collaborative consumption communities named

BlaBlaCar, a ride-sharing platform developed a trust-framework in order to secure and

simplify P2P transactions in sharing services. This model is called the D.R.E.A.M.S.

trust-framework (see figure 1) and was presented in June 2013 during an international

online business conference in Paris (Gauthey, 2013). Based on their own experiences

and other sharing initiatives that are operating in the collaborative economy, this model

describes in six different ways how trust is built among users of a sharing service. It

explains that, in order to interact with one another with a solid level of trust, members in

a P2P network must have access to specific information, such as basic information

about other user's identity, their level of activity on the platform and how they are

rated/recommended by others (Gauthey, 2013).

Figure 1. D.R.E.A.M.S. trust-framework (Gauthey, 2013)

In order to build trust, BlaBlaCar proposes all information to be Declared. This means

that all users give their full names, add a picture of themselves and if applicable

they add a short biography and indicate their preferences (smoker vs. non-smoker;

talkative vs. quiet; pets allowed vs. no pets allowed, etc.).

Secondly, the R for Rated refers to the possibility for community members to rate each

other. These ratings can be given after sharing a ride with a community member. It is

said that these ratings "significantly increase the level of trust within the community and

the credibility of the service" (Gauthey, 2013). As a member of the service it is now

possible to see whether another person already has used the service and/or whether

he or she is recommended by and trustworthy in the eyes of others.

The letter E is for Engaged, which means that two peers reassure the transaction by

doing a pre-payment on forehand through the platform. In doing so, both peers are now

assured that the actual arrangement will take place.

In regards to the fourth variable, the A for Activity, it refers to the activity of the

members participating on the sharing platform. For example, if they are regular visitors

of the website, or if they respond to their messages, if they actively add new content on

the platform, and so on. Following on this, the collaborative consumption service shows

the last login time of its members and their response rate.

The fifth pillar is the M for Moderated, which refers to the idea that all information that is

transferred by users of a sharing service must be verified by the service itself (i.e. bank

details, phone numbers and correct postal address).

Lastly, the S for Social means a total integration with other social networks (i.e.

Facebook, Twitter, LinkedIn or Google+), in order to check a user's existence in real-

life.

An in-house assessment of the D.R.E.A.M.S. framework was conducted by

BlaBlaCar, which has resulted in a positive outcome for the proposed model. This

research reveals that by using the rules and regulations of the framework, there is a

`trust-score' of 4.2/5 among peers in general achieved. In other words, members of a

sharing platform that follow the rules of this framework are perceived as trustworthy

users by 84% of the respondents. This compared to a 2.2/5 score (44%) for strangers,

3.6/5 (72%) for neighbours and a 4.7/5 (94%) for friends and family members

(Gauthey, 2013).

5. Discussion

In June 2011, a woman returned from vacation to find that her house, which she

had rented out on Airbnb, had been ransacked and robbed by her tenants (Arrington,

2011). This incident severely damaged the company's reputation and pushed Airbnb to

establish stronger security measures and offer a $50,000 host guarantee in the case of

vandalism. Several months later HiGear, a P2P car sharing service that specializes in

high end luxury vehicles was forced to shut down, because four of its member's cars

valued at $300,000 were stolen by a criminal ring (Perez, 2012). This occurred despite

an array of security precautions the company had put in place, including member

screening, credit checks, collision insurance and security deposits. For this reason, the

founders decided that the inherent risk of the business was too high for its members for

them to stay in operation.

After an initial period of wild enthusiasm and some naivety towards collaborative

consumption, these events brought on a sorely needed wave of scepticism towards

sharing economy platforms. With growing concerns as to the safety of P2P

marketplaces, many start-ups realized that "they had lost sight of an element that was

critical to their survival" (Gorenflo, 2012), trust.

The ability to create trust between strangers is a crucial factor that may

determine the success or failure of sharing enterprises (Maag, 2012). According to

Ingram (2012), a sharing economy company can only function if it is built on a solid

web of trust, which could become the "new currency" (Canigueral, Ortiz and Léonard,

2012 p. 15) for P2P interactions. Creating trust between users constitutes a challenge

for sharing economy platforms, since trust underlies every peer-to-peer exchange. Why

would one trust a complete stranger to drive her from point A to point B? Or feel

comfortable staying in a stranger's house overnight?