The Digital Sharing Economy

We’ve been in the digital economy for almost 20 years, but most of our businesses still don’t fully understand what digitization (a technical process) and digitalization (a socio-technological process of applying digitization techniques to broader social and institutional contexts that render digital technologies infrastructure).

Due to the fact that most business people don’t know much about the digital economy, there are a lot of great things that could be studied about it.

First, let’s talk about the sharing economy

Where did the idea of “sharing” come from?

Digitization did not make information scarce; instead, there was a lot of it.

Before digitization, there wasn’t much information available (for example, for a certain product, information is provided by the manufacturer, the distributors, word-of-mouth from previous consumers, and a small number of third-party consumer reports). Digitization has made it possible for many websites to have information about every product (e.g., vendor, non-vendor, third-party non-vendor evaluative websites such as CNET, consumer-to-consumer evaluative websites such as Yelp, recommendation systems in Amazon). Before digitization, there was a lack of balance in information because the supplier knew more about their product than the customer.

After digitization, customers know more about a seller’s product and its competitors than the seller does. In this situation, the imbalance of information is being turned around. In the digital economy, consumers now have more power than they used to. Before the sharing economy, there was a lot of information and people shared it.

In the digital economy, people don’t just share information for no reason.

Let’s look at how the Internet works and what it is made of. The digital infrastructure is designed to be user-driven, open-sourced, and not controlled by a single stakeholder (think Blockchain technologies). Anyone can take part in the open governance of digital infrastructure and make a contribution as long as they follow the rules. Users are encouraged to get involved in creating, innovating, and taking part. The digital infrastructure and ecosystem are built around communities of practice. 

Sharing has become the norm in the digital world we live in

The Internet was built with an open-source architecture that encourages user participation. As a result of digitalization, which made it possible for everyone to contribute through the Web, a culture of volunteering has grown up around the Internet. This kind of behavior is unique because people give their time and effort to other users and organizations for free by, for example, making codes, writing movie reviews, and rating restaurants. There is a class of prosumers who are motivated by a mix of cognitive and emotional reasons for either utilitarian or hedonistic reasons. They add value to businesses that becomes part of firms’ intellectual capital because many of these users who have become consumers work with organizations and companies to co-create new products (like LEGO) without getting paid. 

Volunteerism is the foundation of the sharing economy. When users go from writing for free (like in open-source software) to spending time co-creating with other customers or suppliers, their sense of ownership changes. They think it’s just as okay to share traditional assets like a house or car as it is to share governance on digital infrastructure by giving up their time.


AirBnB, BlaBlaCar, DogVacay, Fon, Getaround, and Lending Club are just a few examples. To meet the needs of the sharing economy, a number of “unicorns,” or companies worth more than $1 billion before going public, have sprung up. 

Their business plans include:

– Changing the way prices work in the market (e.g., Lyft, AirBnB)

– They offer services that weren’t available before (e.g., BlaBlaCar)

– They use what people don’t realize they can do (e.g., AirBnB, Getaround, Lending Club)

– They offer services EVERYWHERE (e.g., Ofo bike that allows dropoff at anyplace)

Their business plans are all based on platforms. Think about Instagram, which is a great example of how the sharing economy works. Instagram doesn’t make things, and it doesn’t have any factories, warehouses, or research centers (note: Kodak used to employ 100,000 people and Instagram has less than 100). 

Even though the sharing economy has led to the rise of unicorns, not much has been written about it. The following areas of study need more in-depth research: 

  • Do sharing economies cause the size of the economy as a whole to shrink?
  • How does the sharing economy affect the growth of the economy?
  • If so, how does it differ across developed and developing economies?
  • What are some legal issues that the sharing economy has to deal with?
  • How do these vary from one place or country to another?
  • Which kinds of things, utilitarian or hedonistic, can be shared?
  • How do people’s attitudes and actions about sharing change based on their demographics?
  • Do people from different generations have different ideas about things like car and home sharing?
  • Are there differences in how people of different races feel and act about peer lending?