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

Term Paper, 2016

19 Pages, Grade: 1,0


Table of Contents

1. Introduction

2. Introduction to the sharing economy

3. Trust in a business context
3.1. Business-to-consumer trust

4. Trust in the sharing economy
4.1. Trust in the company
4.2. Trust in other consumers

5. Discussion

6. Conclusion



List of Figures

Figure 1. D.R.E.A.M.S. trust-framework

1. Introduction

All over the world, people are renting rooms from strangers through Airbnb, outsourcing grocery trips to TaskRabbits, and getting across town with ride-sharing service BlaBlaCar. These people are participating in the sharing economy that has rapidly grown from a niche market to a mainstream social movement. Its continued growth thus the future success of sharing economy companies is contingent upon one crucial factor: trust. This term paper accordingly approaches the question: Can trust make or break a sharing enterprise? This paper will address this topic by first introducing the new economic force called sharing economy. The next two chapters will present the construct of trust on the basis of literature that deals with trust in a business context as well as trust in the sharing economy. Furthermore, a trust-building framework for online sharing services will be presented based on a recent study that was conducted, exclusively on the building process of Peer to Peer (P2P) trust. In the discussion section in Chapter 5 different approaches to the importance of trust for P2P marketplaces will be discussed. Subsequently, conclusions will be drawn based on the contents of the previous sections while there will be also made recommendations for the future.

2. Introduction to the sharing economy

The global population has become entrenched in the dominant ownership mind- set. People are wading through an asset-heavy lifestyle, they own a whole lot of stuff, most of which isn’t really wanted, needed, or even used. Leaving the age of hyper- consumption behind, a new, grassroots model of doing business is emerging, providing consumers with the power to get what they want and need at less personal and environment cost (Gansky, 2010). This new economic force is called the sharing economy.

The sharing economy - also referred to as “collaborative consumption” - can be defined as a “socio-economic system built around the sharing of human and physical assets” (Morgan, 2014) or a “system that facilitates the sharing of underused assets or services, for free or for a fee, directly between individuals or organizations” (Botsman, n.d.). It presents the world with a dynamic solution to a complex problem; there is a finite supply of resources in the world and an ever increasing demand to allocate these resources in the most efficient way possible. This economic model is based on the notion that access to goods and services can be preferable to ownership, since this often leads to a more efficient resource allocation. It is characterized by two parties entering a transaction that allows them to share the use of an asset or service in a mutually beneficial way. In contrast to the sharing economy, the traditional rental economy involves a firm owning an asset that is then rented out. However, in the sharing economy an app or service connects an owner of an asset that is used below capacity with someone who would like to use it. The basics of this model have always existed, as owners of underutilized assets such as car or an empty guest room searched for those who desired the temporary use of such assets in their community via bulletin boards or newsletters. However, the emergence of mobile software 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.


Excerpt out of 19 pages


Trust in the Sharing Economy. Can trust make or break a sharing enterprise?
Institut for Interpreter and Languages Munich  (Hochschule für angewandte Sprachen)
Business Economics
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ISBN (Book)
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sharing economy, trust, collaborative consumption, sharing company, sharing enterprise, sharing platform, business-to-consumer trust, cognitive trust, trust framework, blablacar, dreams framework, sharing, trust building
Quote paper
Evelyn Walter (Author), 2016, Trust in the Sharing Economy. Can trust make or break a sharing enterprise?, Munich, GRIN Verlag,


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