In line with our mission to assess sustainable markets as a whole, Misum invited sociologist Frank Boons from the University of Manchester to discuss approaches to a sharing economy as “ecosystem of provision”. Boons presented his paper “Towards a sharing economy – Innovating ecologies of business models” (authored together with Nancy Bocken from Lund University) and underlined the need to extend the logic of business models in the context of a sharing economy: Instead of firms seeking to maximize individual profit, sustainable business models have to be understood as one node in a net of social practices to provide certain goods and services to fulfill human needs.
While research and political interest in the collective use of goods and particularly the reuse of materials has grown exponentially, little attention has been paid to the social processes behind sharing and circular economies. Boons pointed out that most often the focus is either on entities (producers and consumers) between which goods and material is circulated, or the material flows themselves (e. g. Ellen Mac Arthur Foundation https://www.ellenmacarthurfoundation.org/circular-economy/infographic, , Haas et al. 2015). This conception limits the opportunities for sharing and provision, according to Boons: “There are many possibilities to solve sustainability problems already, but they are outside the ‘business model sphere, if you think of a business model related to profit. Therefore I like to emphasize the ecosystem perspective.” In such systems, different agents with different rationales are interacting with each other, and just like in nature, there is potential for mutualism, competition, parasitism and symbiosis as four big phenomena. Mainstream Economics tends to consider compensated forms of sharing and according business models (cf. figure 2), and the provision of public goods or the “tragedy of the commons” (Hardin, 1968) have been big problem childs in this field ever since (and labelled as “market failure” by economists).
Taking the ecosystem perspective instead, more agents and mechanisms do play a role, for instance public agents, peers and various kind of institutions and values. Boons stresses that understanding sharing only in economic or materialistic terms, the resulting business models are not necessarily sustainable from an ecological or social point of view. In the car industry, for example, a lot of machinery and other parts is recycled from old to new cars, but obviously car use (’with it’s associated GHG emissions) is not sustainable because of this. Following a vast literature review and creating a systematic framework around sharing economy, Boons and Bocken (2018, p. 50) identified four main questions for further examination, with the focus on system needs and effects (instead of goods, materials and firms):
RQ1 To what extent are interactions between business models shaped by the particular need that is provided for?
RQ2 How do interactions between business models affect ecological and social sustainability of provision for human needs, and what tools can be used to assess this?
RQ3 What are typical pathways through which types of provision (such as sharing) become dominant in a system of provision, and what conditions shape these pathways?
RQ4 How can experimentation with sharing business models be facilitated in a way that contributes to (environmental) sustainability, including the elimination of entrenched unsustainable practices?
From ecosystem thinking to approaching the ecosystem
As depicted in figure 3, the development of sustainable business models of sharing is based on a range of different processes, strategies and conditions in the system, similar to natural ecosystems: At the beginning, there might be resources that are not competed and can be easily exploited by new business models, and practices evolve by design and joint learning in niches. But to grow and eventually transform a system of provision (as broader definition for a certain “market”), different conditions and mechanisms are prominent, for instance the availability of technical infrastructure, imitation and adaption by other business models as well as political actions.
How can these processes be acknowledged and facilitated in practice? Frank Boons works at a project initiated by the British Environmental Ministry to explore “How systemic thinking can be brought into policy making on the Circular Economy” and résumés that the first step has to be to make people aware of how their thinking is bounded to specific logics, and introduce them to other parts and practices of the system. The project above, for example, is aligned to the department “Resources and Waste”, which by design considers only certain kinds of regulations. To scale economies of sharing (corresponding to steps c, d and e in figure 3), the different agents have to communicate to each other about their perceptions of the provision of goods and fulfillment of needs, to find out which means and strategies can be used, with potentially new partnerships or new political instruments.
So far, sustainable business models and sharing systems appear mostly on a local scale (and often without a profit motive), for instance repair cafés or swaps for clothes and other goods. Important questions to answer from a sustainability point of view are thus rather how to extend the user base as well as to question the speed and large scale of material circulation and, related to this, systematic lock-ins of not really sustainable practices (like the example of car industry). This involves new technological, social and legal solutions to extent and open up the classical producer-consumer dualism towards symbiotic practices, and social and natural scientists, entrepreneurs and politicians have to carefully listen to each other to support such sharing systems.
Text by Johanna Klatt, research support and project manager at Misum, as follow-up from the Misum Research Seminar and interview with Frank Boons (May 2019 at SSE).
References and further reading:
Boons, F., & Bocken, N. (2018). Towards a sharing economy – Innovating ecologies of business models, Technological Forecasting & Social Change, 137, 40-53.
Haas, W., Krausmann, F., Wiedenhofer, D., & Heinz, M. (2015). How Circular is the Global Economy?: An Assessment of Material Flows, Waste Production, and Recycling in the European Union and the World in 2005, Journal of Industrial Ecology, 19(4), 765-777.
Hardin, G. (1968). The Tragedy of the Commons, Science, 162, 1243-1248.
Ostrom, E. (2015.) Governing the Commons. The Evolution of Institutions for Collective Action. Cambridge: Cambridge University Press.