Key Challenges to Sharing Economy in South Asia: A Pakistani Motorbike Case

Abstract

Culture plays an important role in innovation performance and economic creativity of a society.Considering that sharing economy is a product of innovation,culture becomes an inherited force capable of advancing or deterring behavior towards innovation. Therefore, the aim of this study is to explore the effect of cultural dimensions and their impact on the establishment and growth of sharing economy industry in South Asian countries: firstly, by identifying the barriers to a shared economy startup in this geographical region; and secondly, using the Pakistani metropolitan context to evaluate the feasibility of starting a shared economy motor bike business. In order to answer these two research questions, this paper takes an exploratory approach to research using both primary and secondary data, and makes use of the findings of Hofstede’s cultural dimensions theory in order to find out the deterrents of sharing economy as a result of cultural variation between the developed and developing countries, and of the PEST model analysis in the optics of Pakistan in order to evaluate the feasibility of a motorbike-based sharing economy venture, inspired by the business model of Chinese mobike. The findings of the paper show that the lack of resources from both market and supplier side in collectivist South Asian society and the lack of trust due to high uncertainty avoidance, high terrorism, high corruption etc. were ascribed to be the primary two restraining factors behind the struggling sharing economy industry in these developing countries. Thus, the relationship between the dimension of collectivism-individualism and uncertainty avoidance were found to be most directly associated with entrepreneurship, economic development and innovation. The findings of this paper also demonstrate that besides the strong correlation between economic creativity and the cultural dimensions identified by Hofstede, there are other factors, such as a country’s research and development budget, which may override the impact of culture and promote innovation.In the later section, the feasibility of the motorbike-based sharing economy shows that the metropolitan cities of Pakistan have reached the point enabling this business concept to thrive and grow, starting out with piloting this service in Karachi instead of Lahore as initially anticipated. Moreover, for the business to succeed in Pakistan, the Chinese inspired mobike business model is not practical. Instead, the model should develop closer to that of Uber due to risk of theft and vandalism. The paper also discusses the user profile for the service, identifying that as early adopters, the male groups will dominate, but female users would be onboard as later adopters as soon as cultural (social) challenges are overcome in aforeseeable time span of months to years boosted thanks to the efforts of Careem WOW (Women on wheels).