From ownership to access: How the sharing economy is changing the consumer behavior

Barbu, Cătălin Mihail; Florea, Dorian Laurenţiu; Ogarcă, Radu Florin; Barbu, Mihai Constantin Razvan Article From ownership to access: How the sharing economy is changing the consumer behavior Amfiteatru Economic Journal Provided in Cooperation with: The Bucharest University of Economic Studies Suggested Citation: Barbu, Cătălin Mihail; Florea, Dorian Laurenţiu; Ogarcă, Radu Florin; Barbu, Mihai Constantin Razvan (2018) : From ownership to access: How the sharing economy is changing the consumer behavior, Amfiteatru Economic Journal, ISSN 2247-9104, The Bucharest University of Economic Studies, Bucharest, Vol. 20, Iss. 48, pp. 373-387, https://doi.org/10.24818/EA/2018/48/373 This Version is available at: https://hdl.handle.net/10419/196438 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ The Circular Economy between Desiderates and Realities AE Vol. 20 • No. 48 • May 2018 373 FROM OWNERSHIP TO ACCESS: HOW THE SHARING ECONOMY IS CHANGING THE CONSUMER BEHAVIOR Cătălin Mihail Barbu1, Dorian Laurenţiu Florea2, Radu Florin Ogarcă3 and Mihai Constantin Răzvan Barbu3 1)3)4) University of Craiova, Craiova, Romania 2) Universidad Anáhuac México Sur, Mexico City, Mexic Please cite this article as: Barbu, C.M., Florea, D.L, Ogarcă, R.F. and Barbu, M.C.R., 2018. From Ownership to Access: How the Sharing Economy is Changing the Consumer Behavior. Amfiteatru Economic, 20(48), pp. 373-387. DOI: 10.24818/EA/2018/48/373 Article History Received: 30 December 2017 Revised: 27 February 2018 Accepted: 8 April 2018 Abstract Promoting the principles of circular economy and the new business models advocated by the circular economy can represent a solution for a more prosperous society, less dependent on primary and energy resources and more environmentally friendly. The sharing economy, which primarily involves the transformation of traditional market behaviors into collaborative consumption models, that ensure a more efficient and sustainable use of resources, is part of the circular economy and has generated business models that are compatible with it. This article discusses the possibility for the sharing economy to bring about profound changes in consumer behavior towards products and services and to highlight the factors that drive consumers’ shift towards the sharing economy. For this purpose we developed and tested a model in which the change in consumer mindset has as the main direct determinants the satisfaction with the services of the sharing economy and the intention to access such products and services. The study uses data collected through a questionnaire, applied to a sample of 320 customers of Uber – a symbol of the sharing economy, and processed using structural equation modelling. Research results show that there are premises for switching to an access-based consumption model. Keywords: circular economy, sharing economy, collaborative economy, consumption pattern, consumer behavior. JEL Classification: O33, Q53, M30. Corresponding author, Cătălin Mihail Barbu – [email protected] AE From Ownership to Access: How the Sharing Economy is Changing the Consumer Behavior 374 Amfiteatru Economic Introduction Circular economy is a desideratum of a sustainable economy. In 2015, at the level of the European Union, a package of measures was adopted, regarding the necessity to move to a circular economy, indicating, as a recommendation, some directions to follow. The plan proposed by the European Commission for the transition to the circular economy involves actions for each stage of the value chain. Concerning consumption, it is noted that consumer choices “can support or hamper the circular economy” (EU, 2015). Following factors influencing the consumer choice are specified, among others: the information they have access to, the range and prices of products/services, the level of regulations. Also, regarding the consumption-specific actions for the transition to the circular economy, it is stated that it can be supported by innovative forms of consumption. In this context, the collaborative economy is defined as “the sharing of products or infrastructures”, for example by using a software or digital platforms (EU, 2015). In this paper we intend to investigate to what extent the sharing economy leads to a change in consumers’ mentalities and behavior so as to bring about a fundamental change of paradigm, namely the transition from an economy based on ownership of goods to an economy based on the shared-use of goods and services. The hypothesis that we started from is that, supported by technological advances, the current sharing economy has the potential to drive profound changes in consumer behavior towards products and services. Thus, the use of products, the access to products and services will become more important than ownership of goods and will provide an appropriate framework for a more efficient and environmentally friendly use of resources. 1. Literature review The concept of “circular economy” has been frequently discussed in the economic literature over the past 20 years. The term was first used by the researchers Pearce and Turner (1990). Ghiselini, Cialani and Ulgiati (2016) identify three possible roots of the concept: laws of thermodynamics (Georgescu-Roegen, 1971); general theory of systems (von Bertanlaffy, 1950) or industrial ecology. Pearce and Turner (1990) show that, traditionally, the economy did not pursue recycling and treated the environment as a storage tank of waste. But things have to change and the planet must be seen as a closed economic system, where the links between the economy and the environment are not linear but circular, and for a win-win relationship between the two, it is necessary to have a closed-loop of materials in the economy (Su et al., 2013). Although there is no unanimously accepted definition of the circular economy, its central element is this closed circular flow of materials and the use of material resources and energy in several phases (Yuan, Bi and Moriguichi, 2006). The 3R principles - reduction, reuse, recycling – are the most common approaches (MacArthur, 2012; Lieder and Rashid, 2016; Murray, Skene and Haynes, 2017). The European Union's action plan for the circular economy includes stipulations on production, consumption, waste management, secondary raw materials market and water reuse, as well as priority areas such as plastics, food waste, critical raw materials (Câmpeanu, 2016). Regarding the consumption specifications, new forms of consumption practices are envisaged, such as those generated by the collaborative economy and digital platforms. The Circular Economy between Desiderates and Realities AE Vol. 20 • No. 48 • May 2018 375 The collaborative economy, as a part of supporting the circular economy, is a concern on the European Commission's agenda (EU, 2016). Although this type of economy can create opportunities and benefits for consumers and entrepreneurs, at the same time it can generate a series of legal issues because it blurs “established lines between consumer and provider, employee and self-employed, or the professional and non-professional provision of services”. They are not the only critics of the sharing economy, the literature adding the following: the asymmetry of information between the parties (Dredge and Gyimóthy, 2015); sliding in certain contexts into rapacious exploitation forms (Quattrone et al., 2016); promoting a certain type of discrimination (this type of economy is accessible firstly to white, middle-class, middle-aged, young people (Cheng, 2014)). There is no consensus in the literature, on the scope of the concept of “collaborative economy”. Different terms are used in the literature, such as collaborative economy, sharing economy, peer to peer economy, collective consumption, etc. (Dredge and Gyimóthy, 2015; Codagnone and Martens, 2016; Codagnone, Abadie and Biagi, 2016). Also, each specific sector has its own terminology: car sharing, carpooling, home sharing, providing services on demand, etc. For the purpose of this paper, we will recognize as one of the main features to describe the sharing economy, the consumer's ability to “use something” rather than to “own something” (Bonciu and Balgar, 2016). The literature investigating the factors that determine the orientation toward the sharing economy and the consumption patterns that sharing economy promotes is a very broad one. Möhlmann (2015) investigated ten possible determinants of collective consumption’ satisfaction and of the buying intention for such services. She found out that the satisfaction of using collective consumption is positively affected by cost savings, familiarity, trust and utility. The buying intention of sharing services is positively affected by the utility of the service. Hamari, Sjöklint and Ukkonen (2015) found out that the positive attitude toward sharing services can be predicted by the sustainability and enjoyment of these services, while the behavioral intention to access sharing services can be predicted by the enjoyment and economic benefits of these services. They concluded that “perceived sustainability is an important factor in the formation of positive attitudes towards collective consumption, but economic benefits are a stronger motivator for intentions to participate in collective consumption” (Hamari, Sjöklint and Ukkonen, 2015, p.9). Hawlitschek, Teubner and Gimpel (2016) investigated 24 possible reasons for people to engage in collective consumption. The most important determinants, in their view, are enjoyment in sharing, knowledge of how to engage in sharing practices, the sense of belonging, the social experience and thriftiness. Balck and Cracau (2015) sought to identify the motives to participate in the sharing economy as a consumer. Their study across four sectors identified the cost as the most important reason of the sharing economy. Lamberton and Rose (2012) propose a model in which the likelihood to choose a sharing program is determined by the cost, utility, familiarity and perceived substitutability of ownership and sharing options. At the present moment, there are only a few studies on the collaborative economy in Romania and they only present vaguely the situation in this sector such as the emergence and tendencies. In general, these studies reveal that the sharing economy is at an early stage in Romania, one of the most important barriers being the very strong desire of Romanians to possess properties (Angheluţa, 2017) and that their behavior is mostly directed toward non-sharing (a specific phenomenon of all former socialist countries). The young people (millennials) are most likely to engage in certain forms of collaborative consumption (Treapăt, Gheorghiu and Ochkovskaya, 2018). AE From Ownership to Access: How the Sharing Economy is Changing the Consumer Behavior 376 Amfiteatru Economic 2. The hypotheses of the research and the proposed model The proposed model identifies satisfaction with the products/services of the sharing economy and the intention to access such products and services in the future as the direct determinants of the consumers’ mindset shift. Intention mediates the relationship between satisfaction and consumers’ mindset shift. In turn, the satisfaction with the products/services of the sharing economy is influenced by six variables: utility, ease of use, trend, trust, saving and ecology, defined as environmental concerns of consumers. The proposed model is depicted in figure no. 1. The products and services of the sharing economy connect people to realize different economic activities. Thus, traditional industries and established suppliers are shortcircuited: the hotel sector, the taxi transportation in cities, the railway transportation, etc. One of the elements that support the sharing economy is the excess capacity of consumer resources: places available in the car, rooms available at home, spare time to perform a range of activities. The sharing economy is in its infancy but has a great potential to reconfigure business sectors. Figure no. 1: The proposed model The proposed model is consistent with the theory of planned behavior (Ajzen, 1991). The Utility variable is characterized by three items adapted from Möhlmann (2015). Utility describes how the product meets a need. The sharing economy has widened the market for some key sectors: transport, accommodation services, its success showing that its services are useful. Our hypothesis is that:  H1: Utility positively influences satisfaction toward consuming a product of the sharing economy. Ease of use describes how the product is easy to access. For products loaded with technology, ease of use is a determinant of product satisfaction and intention to use (Venkatesh and Davis, 2000, Legris, Ingham and Collerette, 2003). We can thus formulate the second hypothesis: Utility Ease of use Trend Trust Savings Ecology Satisfaction Intention Consumers’ mindset shift The Circular Economy between Desiderates and Realities AE Vol. 20 • No. 48 • May 2018 377  H2: Ease of use positively influences satisfaction. The trend characterizes the extent to which the product/service is fashionable, being widely discussed and accessed by consumers (Moeller and Wittkowski 2010). A fashionable product leads to a first try by a large number of people. A trendy product may remain an evanescent event or it may turn into a long-term trend. The hypothesis three can be synthesized as follows:  H3: The trend has a positive effect on the satisfaction with a sharing consumption. Trust is an element of support for testing and adapting a new product, especially in the case of a sharing economy where service providers are not subject to a very rigorous certification process (Botsman and Rogers, 2010). In the context of the sharing economy, confidence arises from the reputation system that allows providers to evaluate the providers. We can speak of a digitization of publicity through the word-of-mouth (Dellarocas, 2003). The four hypothesis captures the impact of confidence on satisfaction:  H4: Trust has a positive effect on the satisfaction with a sharing consumption. Savings are one of the factors supporting the sharing economy (Bock et al., 2005). By accessing products and services from the sharing economy, consumers can save money, time and stress themselves less. Therefore we approach the savings for consumers from an extended perspective. We can formulate the following hypothesis:  H5: Savings positively influence satisfaction. Ecological issues may be of interest to consumers when making purchasing decisions (Hamari, Sjöklint and Ukkonen, 2015). A number of authors have argued that involvement in the sectors of the sharing economy leads to sustainable long-term development by optimizing the allocation of resources (Prothero et al, 2011). The sixth hypothesis is:  H6: Ecology positively influences satisfaction with a sharing option. Satisfaction with the product will translate into the intention to purchase that product or service in the future. In the long run, this can lead to a consumers’ mindset shift, and thus determining significant changes in consumers’ behavior. The hypotheses seven, eight and nine are formulated as follows:  H7: Satisfaction positively influences intention to access a sharing option.  H8: Satisfaction positively influences the consumers’ mindset shift.  H9: The intention to use a sharing option positively influences the consumers’ mindset shift. The items used to describe the variables are detailed in Appendix A. Also, in the appendix A we have specified the coding and the source of the items. 3. Research methodology The product taken into account to characterize the sharing economy is the trip with Uber. Uber is an application on the mobile phone that allows drivers who want to supplement their revenue to connect with people who want to travel in a safe and enjoyable manner, AE From Ownership to Access: How the Sharing Economy is Changing the Consumer Behavior 378 Amfiteatru Economic and thus benefit from a better alternative than the taxi or the public transportation. The impact of the Uber is so great that the term “uberization of the economy” has come to be synonymous with the sharing economy, according to Lévy (2014), director of the Publicis advertising agency, quoted in the Financial Times. The sample size is 320 respondents. They were selected from Uber users from two cities in Romania, Bucharest and Cluj-Napoca. The respondents were selected among the students from the Bucharest University of Economic Studies and the Babeş-Bolyai University of ClujNapoca respectively. We consider the sample to be representative of the investigated problem as young and educated people are those who adopt innovative products such as Uber and are aware of the technology, as mentioned in the studies above (Angheluta, 2017; Treapăt, Gheorghiu and Ochkovskaya, 2018). In addition, educated young persons are those who can act as agents of change and can be the promoters of new consumer patterns. The questionnaires were completed online. All selected respondents used the Uber service in the last 30 days prior to completing the questionnaire. The questionnaires were completed during the months of April and May 2017. The structure of the sample is presented in table no. 1. Table no. 1: Structure of the sample Variable Specification Percentage - % - Sex M 57.81 F 42.19 Age < 20 1.56 21-30 78.12 31-40 15.63 > 41 4.69 Highest degree of education High school 25 University - Bachelor 64.06 University - Master 10.94 Source: Authors’ calculations In measuring our constructs, we used both formative and reflective measures, depending on the operational definitions and the different aspects that we had to capture. For the constructs that we could not identify suitable items in the literature, we used a two-step approach (Langerak, Hultink and Robben, 2004) to develop the measures. For the first stage, we generated a pool of potentially suitable items for each construct through repeated interviews with five academics. In the second stage, we conducted five cognitive interviews with individuals belonging to the studied population for the selection of the most appropriate items for each construct. Also, it was considered to avoid any confusing expression and a proper discrimination between constructs. For all the constructs, we used a seven-point Likert scale. The questionnaire was originally developed in English, translated into Romanian, and then retranslated into English following the back-translation approach (Brislin, 1970) to ensure that the two versions are identical. 4. Results and discussion We choose structural equation modelling based on partial least squares (PLS) to test our hypotheses, using the SmartPLS 3 software, given its superiority in estimating models with formative latent variables (Lowry and Gaskin, 2014). PLS models require a two-stage approach, starting with the measurement model and continuing with the structural model (Barcla, Higgins and Thompson, 1995). The Circular Economy between Desiderates and Realities AE Vol. 20 • No. 48 • May 2018 379 4.1. The measurement model Using a combination of both formative and reflective measures to capture our variables leads to different approaches in the validation of the measurement model. For constructs with formative measures, we followed the recommendations of Diamantopoulos, Riefler and Roth (2008), who dismiss the use of the classical validation procedure. As the different observed variables build the construct in this type of measurement, item weight was computed instead of the classical factor loading and multicollinearity becomes essential to check. We calculated the variance inflation factors (VIF) of the observed variables for every construct and obtained results below the more conservative threshold of 5 as suggested by Hair, Ringle and Sarstedt (2011), showing that multicollinearity does not affect our data (table no. 2). Table no. 2: Measurement model results Construct/ Dimension/ Indicator VIF Weight Loading CR AVE Utility (formative construct) N.A. N.A. Utility1 2.046 .242 Utility2 Utility3 1.744 1.357 .742 .163 Ease of use (formative construct) N.A. N.A. Ease of use1 3.528 .204 Ease of use2 4.229 .791 Ease of use3 2.607 .040 Trend (formative construct) N.A. N.A. Trend1 1.349 .763 Trend2 1.349 .366 Trust (formative construct) N.A. N.A. Trust1 2.843 .688 Trust2 1.961 .240 Trust3 3.075 .162 Savings (formative construct) N.A. N.A. Savings1 1.310 .292 Savings2 1.426 .644 Savings3 1.565 .290 Ecology (reflective construct) .851 .665 Ecology1 .827 Ecology2 .584 Ecology3 .984 Satisfaction (reflective construct) .892 .806 Satisfaction1 .901 Satisfaction2 .895 Intention (formative construct) N.A. N.A. Intention1 3.081 .933 Intention2 2.691 -.203 Intention3 1.759 .303 Consumers’ mindset shift (formative construct) N.A. N.A. CMS1 1.437 .316 CMS2 1.328 .631 CMS3 1.389 .292 Source: Authors’ calculations AE From Ownership to Access: How the Sharing Economy is Changing the Consumer Behavior 380 Amfiteatru Economic For the reflectively measured constructs, convergent validity and internal consistency were established by verifying that the factor loadings were greater than the threshold of 0.7 or alternatively, greater than the more liberal threshold of 0.5 (Carmines and Zeller, 1979), and that the average variance extracted (AVE) was greater than the 0.5 benchmark (Fornell and Larcker, 1981). The discriminant validity was also established, by verifying that the square root of AVE was greater than the inter-construct correlation for the reflectively measured constructs. 4.2. The structural model Table no. 3 summarizes the findings in terms of standardized coefficients and t-values obtained after performing 1000 bootstrap subsamples. Table no. 3: Structural model results Path Path coefficient (β) t-Value (Bootstrap) p-value Utility Satisfaction .173 4.800 <.001 Ease of use Satisfaction .376 8.637 <.001 Trend Satisfaction .079 1.272 .204 Trust Satisfaction .345 5.629 <.001 Savings Satisfaction .182 4.144 <.001 Ecology Satisfaction -.070 1.912 .056 Satisfaction Intention .651 15.362 <.001 Satisfaction Consumers’ mindset shift .156 1.782 .075 Intention Consumers’ mindset shift .457 7.421 <.001 Source: Authors’ calculations Out of the six variables analyzed, ease of use has the most powerful effect on satisfaction (H2: beta=.376, t=8.637, p<.001). Sharing economy applications not only cover a latent need, but they allow users easy and intuitive access. Mobility and connectivity solutions facilitate non-stop access to sharing products. The strong impact of the ease of use can be explained by the fact that these applications have a design and functions that are easy to recognize and use by consumers. The results are consistent with other reference studies (Saadé and Bahli, 2005; Igbaria et al., 1997; Chau, 1996). Trust has a significant positive impact on satisfaction (H4: beta=.345, t=5.629, p<.001). In all sectors of activity, trust plays an essential role, perhaps due to the fact that some authority guarantees products and services through certification or consumer protection bodies. But in the field of sharing economy, providers are people who do not necessarily have certification in the field. How safe is it to travel with a stranger in the car or to accommodate to an unknown person? What are the sources of trust in strangers? We appreciate that there are three possible explanations in this respect. A first element that explains trust is the rating system of providers in the sharing economy. The service providers with poor ratings and reviews are removed from the platform. A second reason is the common interest of participants in the commercial act mediated by the sharing economy. Thirdly, trust is the result of changes in mentalities that leads to an easier acceptance of human contact. The Circular Economy between Desiderates and Realities AE Vol. 20 • No. 48 • May 2018 387 Appendix A Coding, description and source of items Construct/ Coding Items Source Utility Adapted from Möhlmann (2015) Utility1 For my city, Uber is a better alternative than the taxi. Utility2 For my city, Uber is a better alternative than a personal car. Utility3 For my city, Uber is a better alternative than the public transportation. Ease of use Own scale Ease of use1 The information provided in the Uber app are detailed. Ease of use2 The information provided in the Uber app are presented in an accessible language. Ease of use3 The use of Uber app is intuitive. Trend Moeller and Wittkowski (2010) Trend1 Using Uber now is a trendy thing. Trend2 I like to use innovative products and services. Trust Adapted from Möhlmann (2015) Trust1 I trust that Uber respects the agreed terms of the trip. Trust2 I trust the Uber drivers. Trust3 I trust the Uber cars. Savings Bock et al. (2005) Savings1 I save money using Uber. Savings2 I save time using Uber. Savings3 I stress myself less by using Uber. Ecology Hamari et al. (2015) Ecology1 Uber-usage leads to a reduction of total gas consumption in the city. Ecology2 Uber usage is friendly with the environment. Ecology3 Uber usage leads to sustainable development. Satisfaction Fornell et al. (1996) Satisfaction1 I was satisfied with my last Uber trip. Satisfaction2 Generally, I am satisfied with Uber services. Intention Lamberton and Rose (2012) Intention1 I will continue to use Uber. Intention2 For my next ride to town I will use Uber rather than a taxi. Intention3 For my next ride to town I will use Uber rather than my personal car. Consumers’ mindset shift Adapted from Lamberton and Rose (2012) CMS1 As Uber-like services will develop I will consider to give up owing a car. CMS2 Using Uber is as good as owing a car. CMS3 For me is more important to be able to move quickly than to own a car. Source: Questionnaire used in research