This article has been translated with DeepL.
NEW RESEARCH | Why sharing companies are rapidly going international
- Published: 21 Feb 2024,
- 9:31 AM
- Updated: 21 Feb 2024,
- 10:07 AM
Sharing companies have unique conditions that make it easy to take the business idea abroad. So what is so special about them, and what should sharing companies with international ambitions consider? Researchers at Linnaeus University clarify.
Many people would rather share tools with others than buy their own. And instead of staying in expensive hotels, it is now easy to rent other people’s homes during your vacation. More and more people are discovering the value of owning less and sharing more – good for the environment and your wallet. And the sharing economy is growing rapidly.
– The total global value of the sharing economy is expected to rise from 113 billion US dollars in 2021 to a staggering 600 billion US dollars in 2027, says Heidi Coral, Linnaeus University.
Highly flexible business models
In her doctoral thesis, she studied how sharing companies enter the international market. By studying the business model, the business ecosystem and the paths of internationalization, she has found the unique conditions for this type of company.
– The business models are very flexible and can be quickly adapted to users’ wishes and needs. So the business model can develop in parallel with the company’s growing international operations.
As the value proposition of companies lies in matching and bringing together owners and users, the number of the two groups must increase in a balanced way.
– This is how they achieve “network effects” and increase the value of the service.
No barriers to getting out into the world
The need to create network effects makes it almost necessary for many sharing companies to expand into international markets. And because the business is based on digital technology with a flexible, scalable business model that can reach users all over the world without major cost or capacity constraints, expansion is not a major obstacle.
– They also do not own any traded assets or incur staff costs. This reduces production costs and paves the way for sustainable growth.
– Instead of focusing on ownership, they collaborate with other players in a business ecosystem to jointly deliver a value proposition.
Resilient and adaptable
All these factors combine to create a good opportunity to internationalize – and to do so quickly.
– Sharing companies are developing their business models, building their business ecosystems and pursuing international expansion from an early stage. These activities are also strongly intertwined and influence each other. Companies are very resilient and adapt quickly to the ever-changing environment,” says Heidi Coral.
Contact heidi.coral@lnu.se
Four tips for sharing companies that want to take their business abroad:
- Skip the perfection. Instead of aiming for a perfect business model from the start, you should try to internationalize early and continue to refine the business model “on the go”. This is possible because the business model is flexible and can change in line with the wishes and needs of users and other ecosystem players.
- Build the business ecosystem early in the process. Since the company is dependent on external resources, you should establish relationships with a variety of stakeholders, both global (such as payment providers and insurance companies) and local (such as users, authorities and media). The resources are then put to good use when foreign markets are opened.
- Prepare from the start. To maximize the speed, scale and scope of internationalization, you should prepare for international expansion from the outset or shortly thereafter. Strive for both passive and active expansion. Making the platform available to as many people as possible (e.g. English version and multiple currencies) increases the chances of gaining many users quickly.
- Use time wisely. Having prepared according to the above advice, you will be able to focus other resources (such as time and human capital) on actively pursuing specific markets of interest, either individually or in small clusters (e.g. geographically adjacent countries or countries with a common language).
More about the thesis
Heidi Coral recently defended her PhD thesis at Linnaeus University, Department of Marketing and Tourism Science, with the thesis Sharecom internationalization: Exploring business models, business ecosystems, and pathways to international expansion.
