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using social networks, sharing businesses can “define and deliver highly targeted, very personal goods and services at the right time and location” (Gansky 2010: 3). Concomitant technological advancements in payment systems have made the process of sharing even more frictionless; most sharing businesses use e-commerce and payment platforms to seamlessly broker transactions between peers, and Owyang (2013) found that 27 of the 30 top sharing businesses rely on online or mobile payment systems. Ultimately, “Technology now makes the act of renting a car from your neighbor a really smooth experience” (The Economist 2010a: 1).
1.4 Introduction to trust in the sharing economy While the sharing economy’s social, economic, and technological drivers are convincingly pragmatic, the benefits – what Gansky (2010) refers to as the “triple bottom line” of greener commerce, greater profits, and rich social experiences – are even more compelling.
These benefits can only be realized if P2P marketplaces are safe, well-lit places to conduct business. A score of high-profile incidents over the course of the past few years have posed a threat to the continued growth of the sharing economy. In 2011, an Airbnb host came home to an aggressively ransacked apartment, finding her cash, credit cards, jewelry, and electronics missing, as well as evidence that the thieves had photocopied her birth certificate and social security number (Arrington 2011). HiGear, a car-sharing service focusing on luxury vehicles, was forced to shut down in early 2012 after a criminal ring used stolen identities and credit cards to bypass security checks and stole four cars totaling $400,000 (Perez 2012). And Lyft, a ridesharing company sporting the tagline “your friend with a car,” was the subject of a widely publicized stalking episode involving a Lyft driver and his female passenger (Biddle 2013).
Fortunately, such incidents are rare exceptions, not the rule, but these outliers nonetheless highlight the centrality of trust.
While pragmatically driven by the social, economic, and technological factors discussed above, the continued global growth of the sharing economy is contingent upon one core, intangible element comprising the foundation upon which all sharing transactions occur: trust.
Campbell Mithun’s January 2012 survey found that a full 67 percent of respondents expressed trust concerns as the primary barrier to using a sharing economy business (Davis 2012). Results from a similarly expansive online survey conducted by TrustCloud suggested that trust indicators enable online P2P transactions (Pick 2012). In these environments, trust is essential – Rinne et al. (2013: 4) conclude, “Trust is the social glue that enables collaborative consumption marketplaces and the sharing economy to function without friction.” A working theoretical framework of trust will thus be presented in the next chapter.
2 Trust: A theoretical framework Academic interest in trust can be traced back through fifty years of research. The great majority of leading scholars, however, cite a continued ambiguity surrounding a concrete, universally accepted definition of trust, and varied streams of divergent research regarding the core elements of its very nature (Barber 1983; Misztal 1996; Seligman 1997; Hardin 2002; Stolle 2002; Khodyakov 2007). Despite this confusion, trust has been delineated as the crux of social order, enabling economic productivity and democratic stability, as well as civic integration, cohesion, and engagement (Offe 1999; Lewicki et al. 1998; Newton 2001; Stolle & Hooghe 2004; Welch et al. 2005). As such, scholars have generally agreed trust maintains a critical importance and productive, cohesive function in the context of individuals, communities, regions, and nations (Stolle 2002). In the following discussion, I will operationalize the nature of trust salient to the sharing economy.
2.1 Defining trust Trust has been defined within many theoretical orientations, as a property of the individual and of the collective, and within the context of many intellectual disciplines, including psychology, sociology, political science, economics, anthropology, and management science.
Within this abundance of conceptualizations are two emergent properties that, together, comprise a definition of trust: expectation and risk. To define trust, I will begin by investigating the relationship between trust and expectation, and will then build on this relationship by adding in further considerations of uncertainty and vulnerability inherent in risk.
2.1.1 Expectation At a fundamental level, trust can be encapsulated by a basic expectation regarding the behavior of an interaction partner (Möllering 2001). A trusting relationship is contingent upon two factors: first, that the other party has good intentions (Freitag & Traunmüller 2009), and second, that the other party has the technical competence to implement those intentions (Yamagishi & Yamagishi 1994). Rotter (1971) and Ba (2001) extend this combination of goodwill and competence to reliability; beyond the good intentions and required capabilities, individuals must be relied upon to choose the trustworthy course of action in the face of freedom to renege on the trusting relationship. Luhmann (cited in Beldad et al. 2010: 858) characterizes this behavioral freedom as the “disturbing potential for diverse action,” and contends that trust is an expectation that others will handle this freedom “in keeping with the personalities they have presented and made socially visible.”
Trust, then, also contains an indispensable element of risk. Bradach and Eccles (1989:
104) reconcile such expectation and risk in declaring, “trust is a type of expectation that alleviates the fear that one’s exchange partner will act opportunistically. Of course, the risk of opportunism must be present for trust to operate.” The omnipresence of risk in trusting relationships constitutes the second piece of the definition of trust.
2.1.2 Risk Many scholars assert that the decision to trust inherently implicates a situation of risk (Luhmann 1988; Sztompka 1999; Hardin 2002; Huemer 2004; Wang & Emurian 2005). As long as the possibility of betrayal or defection exists – even when the risk is assessed as negligible – a situation requires trust (Kee & Knox 1970; Gambetta 1988). This element of other-party agency is central to forming a complete picture of a trusting relationship, as “trust is a bet on the future contingent actions of others” (Sztompka 1998: 20). Yamagishi and Yamagishi (1994) indicate that trust is the mechanism by which individuals can regularly engage with others – despite ubiquitous social uncertainty – to obtain necessary psychological and material resources.
This extant and ubiquitous nature of social uncertainty throughout all social exchange highlights the inextricable relationship between trust and risk. Proponents of rational planning theory postulate that the decision to accept risk and place trust is a rational assessment of the probability of expected gain (Coleman 1990). Unfortunately, the use of rational planning to assess risk and accordingly grant or withdraw trust is not always pragmatic. Sztompka (1999) notes the human vulnerability to psychological biases and emotional, irrational behavior; even if individuals were calculating, rational agents existing in a deterministic universe, fully assessing the risk of every trusting decision would often be inefficient. Luhmann (cited in Beldad et al.
2010) asserts that the function of trust is to reduce environmental complexity, continuously simplifying life through repeated risk-taking; such behavior allows individuals to adapt and continue to function normally as they encounter increasingly complicated situations in contemporary societies (Welch et al. 2005).
In summary, trust is a multifaceted concept comprised of expectation – contingent on both benign intentions and competency – and risk. While individuals optimally negotiate expectations and the associated risk by means of a thorough process of rational decision-making, such a method is not always feasible in the context of an individual’s time and resources. Thus, trust can be defined as a mobilizing mechanism allowing individuals to navigate the environmental complexity of modern society and act on expectations despite extant risks.
2.2 Types of trust The above definition of trust can be operationalized further into two distinct types. Many scholars (Yamagishi & Yamagishi 1994; Couch & Jones 1997; Putnam 1993, 2000; Hardin 2002; Stolle 2002; Glanville & Paxton 2007; Khodyakov 2007; Uslaner 2000; Freitag & Traunmüller 2009; Delhey et al. 2011) identify particularized and generalized trust as two significant, emergent theoretical streams within trust research, as the nature of trust diverges most dramatically in exchanges with people we know well and people we have never encountered before. While particularized trust – what Putnam (2000) refers to as “thick trust” – is extended to a circle of close social proximity, generalized trust encapsulates an abstract attitude toward people in general, and has a broad radius that extends beyond the immediate social scope to include strangers. Such generalized trust is most relevant to transacting with strangers in the sharing economy.
2.2.1 Generalized trust There are two emergent properties of generalized trust in academic literature. The first asserts that generalized trust goes beyond the boundaries of face-to-face interaction, and “beyond specific personal settings in which the partner to be cooperated with is already known” (Stolle 2002: 403). As such, generalized trust involves a “standard estimate” of the trustworthiness of any given trustee – trustors must approximate a level of trust to place in the average person (Coleman 1990; Robinson & Jackson 2001; Glanville & Paxton 2007). The second emergent property of generalized trust implicates the nature of the generalized trusting attitude. Yamagishi and Yamagishi (1994) and Couch and Jones (1997) both classify generalized trust as global trust in the benevolence of human nature, and Putnam (2000: 133) contends it can be viewed as “a ‘standing decision’ to give most people…the benefit of the doubt.” Conceptually, then, generalized trust can be described as an attitude extrapolated from the willingness to place trust in the
Sharing economy communities, in which people must trust a stranger to drive their cars or stay in their apartments, are thus contingent on the continued development of generalized trust. The rise of the sharing economy is emblematic of a larger global movement characterized by increasing geographic and social mobility producing diverse interactions in a variety of new contexts and regular encounters with new interaction partners; as such, generalized trust is highly relevant in the contemporary setting. Generalized trust has been characterized as a critical element of social capital and the foundation of civic behavior (Stolle 2002), as the basis of reciprocity and social connectedness (Delhey et al. 2011), and as a ‘bridging’ mechanism linking people to engage with others unlike themselves (Stolle & Hooghe 2004). Because of its productive social function, generalized trust is often cited as more important than particular trust (Delhey et al. 2011).
The importance of generalized trust can also be derived from its utility; Granovetter (1973) cites the importance of weak ties to individual opportunity and community integration, and Khodyakov (2007) notes that the development of weak social ties is crucial to acquiring otherwise inaccessible resources. In the sharing economy, generalized trust connects us to available resources when we need them through a technologically mediated trust network;
without generalized trust, members of the sharing economy would not be able to efficiently capitalize on the latent value of nearby resources.
2.3 Context: Online trust The development and maintenance of generalized trust is critical to enabling the sharing economy; this development is in turn contingent upon the context in which this trusting behavior occurs (Stolle 2002). Fundamentally, a trusting relationship is not absolute – a trustor will trust a trustee with respect to the trustee’s capability to execute a specific action or service within a particular context (Grandison & Sloman 2000). A trustor might trust in some contexts, but not others (Lewis & Weigert 1985), and such trust is affected by individual differences and situational factors (Wang & Emurian 2005). Gefen (2000: 727) encapsulates this analysis in concluding “trust is, by its very nature, complex, multidimensional, and context-dependent.” The online context presents a unique setting for the investigation of trust, as the emergence of Web 2.0 technologies is impacting the nature of commerce and relationships in unprecedented ways. Online interactions, comprised of “a complex blend of human actors and technological systems” (Friedman et al. 2000: 36), are taking place by means of an increasing body of applications and virtual environments in which users interact both through content and directly with one another (Golbeck 2009). Such virtually mediated interactions offer abundant opportunities to engage with complete strangers (Resnick et al. 2000). The rapidly evolving capabilities and features of online interactions are giving rise to new, emergent paradigms of human behavior within these settings.
Consequently, the online setting presents an entirely new context in which trust must be negotiated without many of the normal antecedents and indicators. With its many variables and unknowns, the Internet can be seen as a setting in which the conventional rules and knowledge of everyday experience do not apply, and as such is perceived as a place of high risk (Rutter 2001), especially with regard to electronic commerce. Users face privacy risks in that personal information can end up in the hands of the wrong people, and financial risks through transacting with unreliable parties (Golbeck 2009). And, as Ba (2001: 325) comments, “With the global, but insecure, Internet being the primary carrier of electronic commerce transactions, websites can be counterfeited, identities can be forged, and the nature of transactions can be altered.” Trust, therefore, is increasingly recognized as a crucial element of enterprise success in the online setting (Corritore et al. 2003, Beldad et al. 2010).