Reorienting the sharing economy for social benefit: the nonprofit digital platform business model

ABSTRACT

Purpose>Digital platforms enable the sharing economy and have become dominant business models in many industries. Despite their many benefits, negative externalities associated with the growth of for-profit digital platforms, such as Uber and Google, have ignited concerns among market participants, policymakers and society as a whole, without corrective market forces in sight. One way to address this problem is through a combination of government regulation, criminal enforcement actions and private antitrust litigation. This study aims to analyze an alternative approach, called the nonprofit digital platform (NDP), which is an emerging business model capable of unleashing free-market forces and enhancing the sharing economy’s social benefits.Design/methodology/approach>This study documents the negative externalities (actual and potential) of for-profit digital platforms, uses the product attributes model to explain the market position and strategy of NDPs with respect to for-profit digital platforms and provides recommendations for the successful launch and management of NDPs.Findings>An NDP is a market-based alternative to antitrust, regulation and litigation that enhances the social value created by the sharing economy, but its success requires startup-like management that attracts and retains talent, capital, effective advertising and positive network externalities.Social implications>NDPs can force free-market adjustments in the industries they enter, reduce the negative spillovers of for-profit digital platforms and increase social value by incrementally raising the level of competition.Originality/value>This study conceptually explores the value that nonprofits could bring to the sharing economy in fulfilling its promise and provides strategic recommendations for social-digital entrepreneurs and nonprofits.