Governance and Trust in the Sharing Economy: Issues and Solutions along the Social-Economic Exchange Continuum

Abstract

The sharing economy is a growing sector that raises important questions for governance, trust, and the impact of the intersection of commercial and social motives. However, governance research in this context is relatively limited, and generally focused on the consumer perspective.

The authors take a triadic approach to governance that explores the relationships between platforms, providers, and consumers. Leveraging governance theories from marketing and management, as well as agency and social exchange theories, the authors develop a conceptual model of formal and relational governance mechanisms in the sharing economy. Through qualitative in-depth interviews and open-ended survey questions, and a field study using text analysis the authors validate their model and demonstrate that economic-focused platforms favor formal governance mechanisms and develop institution-based trust in the platform, while social-focused platforms favor relational governance mechanisms and lead to interpersonal trust in the membership. Hybrid platforms feature both forms of governance but formal mechanisms dominate. Further, the authors describe the implications for managers to deal with exchange and governance problems to prevent platform churn (customer and provider defection).