Synthesizing theoretical framework

The primary aim of the study is to fill the gap in the understanding of sharing economy from the customer perspective by the exploration and analysis of customer-perceived value using this new business model. From previous discussions on customer value in literate, the value dimension approach is likely one of the key theories to understand the nature of customer value. Empirical evidence in different sectors such as tourism services (Petrick, 2002), products consumption (Sheth et al, 1991), and shopping experience (Kuusela, 2007; Babin et al, 1994) have proved these value dimensions. Within the scope of this study, the author will apply customer value dimensions in examining the sharing economy phenomenon. These value dimensions are defined as a multi-dimensional approach (Sanchez and Iniesta, 2007) and the researcher considers the sharing economy as a holistic and dynamic notion.

In this study, sharing economy phenomenon is studied by its benefits and costs among four key dimensions: economic, functional, emotional and symbolic value (Rintamäki et al., 2007). Each dimension includes both costs and benefits. The study aims to identify the costs and benefits of this sharing economy. As this paper moves up the framework, the abstract level increases as the paper looks deeper into the nature of customer behavior. The structure of the study starts from economic and functional value focusing on the utilitarian value of products or services, to emotional and symbolic value focusing more on the hedonic perception of customers (Figure 3). Below this paper will discuss, in detail, the value dimensions.

39 Figure 3: Synthesis of theoretical framework

Economic value is defined as “product’s objective monetary worth to a customer adjusted for the availability of competitive substitute products” (Smith & Nagle, 2005, p. 41) or simply as low price or the best trade-off between quality and price (Gale & Wood, 1994;

Zeithaml, 1998). Customers who spend time and effort to find the lowest price prefer economic value. Interestingly, researchers note that customers are incapable of remembering the exact price of a product. Consumers encode price, in their assumption, as expensive or cheap in comparison with other offerings (Zeithaml, 1998). Customers may consider this option, in case having a better offer with a higher price if they perceive that the increase in quality is greater than the growth in price. Economic value is considered as the “hard-to-beat” driver of customer value (Rintamäki et al., 2007). In a sharing economy context, when people provide a service using their available resources, users offer at a better price without adding regular operational expenses. Using services from private providers, seen in the sharing economy, users could find a cheaper choice in comparison with traditional offerings.

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Functional value is defined as the “perceived utility acquired from an alternative’s capacity for functional, utilitarian, or physical performance” (Sheth et al., 1991, p. 160).

Functional value focuses on solutions for customers. Customers concerned about functional value want solutions that meet their needs with less time, effort, searching cost and decision cost (Rintamäki et al., 2007). A service has functional value when it has sufficient desired characteristics and performs the designed functions (Smith & Colgate, 2007). Correct attribute, appropriate performance, and appropriate consequences, for instance, could be considered as the key facets for functional value (Woodruff, 1997).

The functional value dimension considers the sharing economy as a solution for customers. Customers’ perception of the sharing economy’s functional extends to how sharing economy systems work, how convenient the system and if the new way of consuming helps customers to save both time and energy.

Functional costs in the sharing economy may include search costs and learning costs.

Search costs appear when customers are looking for suitable products or services for their needs or searching for a sharing program to join. Search costs appear, especially in subscription models, after entry as well. Due to the fact that the offerings in the sharing economy are individual and subject to change, users must keep searching until they find a decent offer; this extended search time increases the search cost. In addition, there are learning because customers have to familiarize themselves with new products or services in sharing economy. For typical offers, this represents only a one time charge, while in the case of collaborative consumption customers have to sacrifice in every single transaction. For example, a customer buying a new car learns the idiosyncrasies of that car’s usage once. In contrast, if they rent cars, they will need to discover how to operate a different car every time they want to use the vehicle (Lamberton & Rose, 2012).

Emotional value is defined as “perceived utility acquired from an alternative’s capacity to arouse feelings or affective states” (Sheth et al., 1991, p. 161). Emotional value emphasizes the experience or feelings of customers as they use a service. Emotional dimension could be understood such as feeling (pleasure, enjoyment), social-related (bonding, interaction, trust), or epistemic (curiosity, knowledge) (Smith & Colgate, 2007). Emotional value focuses on the “how” of product experience, whereas economic and functional value focuses on the “what” of product use. In the sharing economy, the social interaction is relatively strong between individuals. Users, in this economy, not

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only consume a service but also, engage in a connection with other individuals including the service provider (Lamberton & Rose, 2012). The public regards the sharing economy is a new business model. Therefore, customers may have a new experience and feeling when trying this service. The emotional value dimension will focus on analyzing the feeling and affection of customer including self-emotion as well as feeling toward others and the sharing economy as a whole.

Symbolic value is defined as positive consumption meanings that consumers attach to self and/or communicate to others (Smith & Colgate, 2007). Symbolic value denotes what products or services mean to customers or how the item helps a customer to communicate their identity. For example, some products make customers feel good about themselves either by possessing or giving. Other products are meaningful to purchasers because the item associates with their personal spirituality. Furthermore, some products or services help customers to express their personalities, tastes, status or image to others (Smith &

Colgate, 2007). Researchers regard symbolic value as the highest value among four key value dimensions. Although customer choices find their basis in functionality or utility, the reason underlying this choice is their symbolic value (Sheth et al., 1991). The symbolic value is similar to the key motive that decides all customers’ decisions or preferences. In the case of Airbnb, customers may choose collaborative consumption because of their ecology lifestyle or anti-consumption spirit (Lamberton & Rose, 2012).

Customers with environmental concerns may perceive the collaborative lifestyle as an ideal solution to protect the environment by using fewer resources and producing less waste. The anti consumption spirit refers to psychological gains by choosing an alternative way of life by less consuming and more sharing (Lamberton & Rose, 2012).

The symbolic dimension is used to understand a common customer value of sharing economy, in the sense of what it means to them or how the use of sharing economy, reflects customer personality and a self- reliant attitude toward others.

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