Sharing Economy with the Use of Car-Sharing Applications: An Empirical Study in Vietnam

Abstract

The study aims to test the model of Yang et al. (2017) for the overall assessment of the transportation sector in the sharing economy and add some new elements on the benefits of customer loyalty from some previous studies that were not mentioned in Yang's model. This study will take examples from the two big brands of car-sharing apps in the sharing economy in Vietnam - Uber, and Grab. This research focuses on customer loyalty in the sharing economy with Uber and Grab as the transport sector in Ho Chi Minh City. Based on the survey data of 380 customers in Vietnam, the research results show that two independent factors positively impact commitment and satisfaction: social benefits and economic benefits. Simultaneously, economic benefit has a positive effect on satisfaction while trust benefit has a negative effect on commitment. Finally, commitment has a positive impact on customer loyalty in the sharing economy. As a result, companies in the sharing economy can identify which are the key factors that strongly influence customer satisfaction, commitment, trust, and loyalty to help managers to devise the appropriate solutions for promoting the strengths or overcoming limitations to contribute to perfecting and improving the quality of the company's services.

1. Introduction

In recent years, the sharing economy has had some remarkable achievements such as Airbnb averages 425, 000 guests per night totaling more than 155 million annual guest stays – nearly 22% more than Hilton Worldwide’s 127 million served in 2014; Uber now operates in more than 250 cities worldwide and as of February 2015 was valued at $41.2 billion – a figure that exceeds the market capitalization of companies such as Delta Air Lines, American Airlines, and United Continental. Simultaneously, the sharing economy has become a major business, with nearly 20% of the American using sharing-economy services, and nearly 10% having participated as providers (Yang et al., 2017). From the above figures, the development potential of sharing economy is clearly seen.

Mobile Internet is growing fast and can lead to the emergence of more sharing economy companies in the near future. For companies to survive in the cruel competitive market, the aim of having more customers – especially raising customer loyalty is essential. Customer loyalty is a measure of a customer’s likeliness to do repeat business with a company or brand (Dick & Basu, 1994). Consumer loyalty is the willingness of consumers to repurchase the product, or the services and to maintain a relationship with the service provider or supplier (Dimitriades, 2006; Dagger et al., 2007). Customer loyalty is the result of consistently positive emotional experience, physical attribute-based satisfaction, and perceived value of an experience, which includes the product or services (Reynolds & Beatty, 1999; Dagger et al., 2007).

In regards to customer loyalty, benefits are essential. According to Yang et al. (2017) and Lee et al. (2015), for service providers who can bring benefits to customers, customers show positive attitudes and reuse intention; therefore, this study shows that benefit is the most important factor that leads to loyalty. In accordance with the study of Yang et al. (2017), benefits can, directly and indirectly, lead to customer loyalty. Although many studies mentioned the benefits of customer loyalty, there are limitations to researching this issue in the sharing economy. Hence, this study has two aims: first is to test the model of Yang et al. (2017) in Vietnam in the field of transportation (typically with Uber and Grab); second, to incorporate some new elements on the benefits of loyalty from the previous studies that Yang et al. (2017) did not mention such as satisfaction and trust. At the same time, this study also suggests a new factor adding to the model – economic benefit.

Hamari and Koivisto (2013) claimed that sharing economy is a concept that highlights the ability – and perhaps the preference – of individuals to rent or borrow goods rather than buy and own them (Cho, 2020). A sharing economy is defined as an economic system in which assets and services are shared between private individuals (Gwinner et al., 1998). The sharing economy is built on the idea that sharing certain goods, services, and skills is more efficient. This can reduce costs for available goods, services, and time. A sharing economy can be described as an economic model in which goods and resources are shared by individuals and groups in a collaborative way such that physical assets become services. The sharing economy’s growth has been facilitated through advances in big data and online platforms.

The sharing economy is a phenomenon where new business models are emerging, framed as technology-mediated, facilitating access to under-utilized goods or services, and potentially reducing net consumption. While sharing has been a longstanding practice in society, the sharing economy is used as an umbrella term for a broad range of disparate consumption practices and organizational models that include sharing, renting, borrowing, lending, bartering, swapping, trading, exchanging, gifting, buying second-hand, and even buying new goods. Moreover, it is also noteworthy that today’s customers do not need to spend a large amount of money for a certain asset but a small cost by shared use; therefore, the economic benefit factor through sharing is also an issue with regard to the sharing economy. This study emphasizes the benefits impacting customer loyalty in choosing and using Uber/Grab services in the sharing economy.

The research questions related to the theory of social benefits, economic benefits, trust, commitment, satisfaction, which can be used for explaining the impact on customer loyalty when using Uber/Grab services. This is also the objective of conducting the research.

2. Literature Review and Hypotheses

2.1. The Concept of Sharing Economy

Sharing economy is defined as the activity of collecting, giving, or sharing goods and services through online services (Hamari & Koivisto 2015). The sharing economy is an economic model defined as a peer-to-peer (P2P) based activity of acquiring, providing, or sharing access to goods and services that are often facilitated by a community based online platform (Cusumano, 2015). For example, transportation (Uber.com), accommodation (AirBnB.com), or financial services (Lendingclub.com).

Similar to the definitions above, activities in a sharing economy take many forms, not just as leases (Cusumano, 2015) but also as collection, gifting, sharing of access to goods and services, and forms of loan as well (Hamari & Koivisto 2015). The sharing economy, also known as collaborative consumption or peer-to-peer-based sharing, is a concept that highlights the ability – and perhaps the preference – of individuals to rent or borrow goods rather than buy and own them. An important criterion of the sharing economy is that it enables individuals to monetize assets that are not being fully utilized. Underutilized assets range from large goods, such as cars and houses, to products such as tools, and clothing (Cannon & Summers, 2014).

While there are many perceptions about the sharing economy, the common point of note is that the use is based on the Internet, online services (Hamari & Koivisto 2015), and network technology (Cusumano, 2015). Hence, it is clear that the Internet plays a very important role in the sharing economy (Like an intermediary to connect). Therefore, this study assumes that the sharing economy is the act of collecting, giving, sharing, and lending goods and services through an online platform (Internet) between individuals or organizations to meet a need in a short period of time and promote a more cooperative and sustainable society.

2.2. Hypotheses

2.2.1. The Relationship Between Social Benefit and Commitment

The social benefit of customers begins with the relationship between customers and employees such as employees giving personal recognition to customers, hospitality, and friendship between customers and employees (Gwinner et al., 1998). In other words, social benefit facilitates the development of a relationship and provides customers with a friendly service-based social relation (Bitner, 1995) from the service providers. Therefore, the social benefit is considered important in the relationship between the customers and the service providers (Dagger et al., 2007). According to Gwinner et al. (1998), social benefit in the sharing economy is easily experienced because customers will interact directly with the service providers and build social links in addition to economic exchange (Yang et al., 2017). For example, when a customer uses Uber services, the customer will interact directly with the Uber driver as a service provider like talking to each other during the trip. Then, a new connection is formed (new friend) more than just an economic exchange (user and provider) – which makes the customer have a positive attitude toward Uber. Commitment is described as a positive attitude towards the service providers (Newman & Werbel, 1973); therefore, social benefit positively influences customer commitment. Some previous researchers suggested a positive relationship between social benefit and customer commitment such as Hennig-Thurau et al. (2002) and Yang et al. (2017).

H1a: Social benefit positively influences customer commitment toward the service providers in the sharing economy.

2.2.2. The Relationship Between Social Benefit and Satisfaction

Gwinner et al. (1998) identified social benefits are what customers feel from the emotional part of the relationship after using the services. This implies that if the service providers can bring positive feelings to customers, they (customers) will rely on it to value the quality of services. Customer satisfaction and evaluation of service quality have a strong positive effect on customer loyalty intentions as well as on their willingness to speak highly of the organization to others. For instance, a customer who books a Grab car with a cheerful and enthusiastic driver will feel comfortable when using the service, since a friendship is formed – which never happened before with another service provider. Thereby, customers will appreciate the quality of services that Grab offers. It can be clearly seen that social benefits are related to satisfaction, and satisfaction is the customer’s affection from the overall assessment of the service experience (Oliver, 1997; Dagger et al., 2007).

H1b: Social benefit positively influences customer satisfaction towards the service providers in the sharing economy.

2.2.3. The Relationship Between Economic Benefit and Commitment

The study of Hamari and Koivisto (2015) showed that the economic benefit (money-saving, time-saving) tends to have a significant effect on behavioral intention in the sharing economy (Hamari & Koivisto 2015; Bae et al., 2019). Similarly, many researchers believed that sharing economy is an attractive option for consumers due to the economic benefit (low cost) – which is considered important after the global economic crisis (Bardhi & Eckhardt, 2012; Walsh, 2010; Tussyadiah, 2015) – and will continue to grow even when the economy fully recovers (Tussyadiah, 2015). Since customers can save time and money for other purposes, they tend to use the services in the sharing economy due to its economic benefit without being forced to save money. Hennig-Thurau et al. (2007) stated that consumers find the sharing economy appealing because the benefits outweigh the costs. In another word, customers do not need to spend a lot of money, however, can use the service and save time. Hence, customers want to maintain a relationship with the service providers in the sharing economy for economic benefits – which shows that the economic benefit can lead to customer commitment toward the service providers in the sharing economy. Accordingly, commitment reflects the consumer’s willingness to desire and endeavor to maintain a relationship with the service provider (Morgan & Hunt, 1994; Palmatier et al., 2006). Therefore, this study assumes that as economic benefits increase, customer commitment to the sharing economy also increases.

H2a: Economic benefit positively influences customer commitment towards the service providers in the sharing economy.

2.2.4. The Relationship Between Economic Benefit and Satisfaction

The sharing economy is accompanied by diverse expected benefits. Through the creation of new transactions, consumers can enjoy low prices, diverse options, and better quality and convenience, and suppliers can earn additional income, all of which contribute to the welfare of the participants. When joining the sharing economy, customers will maximize the utility wherein the consumer replaces exclusive ownership of goods with lower-cost options (Hamari & Koivisto 2015). For instance, customers using Uber services will receive a cheaper price than other traditional taxi brands – which satisfies customer expectations. Consequently, choosing Uber services will be considered a wise decision (Tran et al., 2020). In other words, satisfaction is expressed through customers’ emotions or feelings towards the difference between their own assessment and expectation toward the service providers (Oliver, 1980).

H2b: Economic benefit positively influences customer satisfaction towards the service providers in the sharing economy.

2.2.5. The Relationship Between Economic Benefit and Trust

When customers start using the service, they will receive many benefits through promotions from the company. More specifically, customers participating in the sharing economy (typically Uber) will be able to receive promotions through mobile apps or emails. At the same time, whenever customers use these promotional codes, the discount price is always applied exactly as in the notice – which shows that the service provider has taken action and reacted (Mayer et al., 1995). This leads to customers’ trust in the providers because trust is a feeling of confidence and security that the service provider genuinely cares for the customer (Scheer & Stern, 1992). Thus, customer trust is formed towards the service providers.

H2c: Economic benefit positively influences customer trust towards the service providers in the sharing economy.

2.2.6. The Relationship Between Trust Benefit and Commitment

Trust benefit helps reduce anxiety and gives customers a sense of comfort when knowing what happens when the service is provided (Gwinner et al., 1998). This proves that customers need for trustworthiness in services and relationship stability are essential (Patterson & Smith, 2001). Customers who are aware of the trust benefits may feel safe and comfortable when using the services (Gwinner et al., 1998), thereby reducing anxiety and increasing confidence in the ability of the service providers to deliver on commitments. For example, Uber or Grab customers when booking cars will know the exact information about the driver and the cost as committed by the providers – which makes customers feel quite secure and confident during the transaction. Moreover, this benefit also reduces the risk and increases the knowledge about the service expectations (Kinard & Capella, 2006). Strengthening the effectiveness of the relationship through reducing the transaction costs can boost customer commitment (Hennig-Thurau et al., 2002). Trust benefit is cohesive and has a positive meaning with the ability to maintain the relationship (the commitment is fulfilled) (Gwinner et al., 1998). In fact, Hennig-Thurau et al. (2002) found a meaningful positive relationship between the trust benefit and commitment.

H3a, b, c: Trust benefit positively influences customer commitment towards the service providers in the sharing economy.

2.2.7. The Relationship Between Commitment and Loyalty

According to the study of Pritchard et al. (1999), commitment is strongly correlated with customer loyalty. Simultaneously, Dagger et al. (2007) also believed that commitment is an important driver of customer loyalty. That is because when customers have a close relationship with the service providers and see them as long-term partners, they will often use the services that the providers bring – which leads to customer loyalty. Besides, commitment also directly affects word-of-mouth behavior (Beatty et al., 1988). When a customer has a good relationship because the service provider is very good, they will be willing to recommend this service provider to others (family, friends, relations, colleagues, peers, etc).

H4: Commitment positively influences customer loyalty towards the service providers in the sharing economy.

3. Research Methodology

3.1. Sampling

This research focuses on customer loyalty in the sharing economy with Uber and Grab as the transport sector in Ho Chi Minh City. So the representative sample for the overall population is identified as customers who have been using Uber and Grab services in Vietnam. This study uses the non-probability sampling method (Convenient Sampling). The sample size of this study was determined by the recommendations of Hatcher (1994) which means that the minimum sample size was chosen to be 5 times the total number of observed variables to fit the research resources (the time and cost). Therefore, the sample size = total observed variables × 5 + contingency = 51 × 5 + 20 = 275.

3.2. Scale

The scale system is set up to measure concepts in the research model. These concepts are measured by development scales and adjusted from the scale system of the previous studies. Specifically, (1) social benefit: using the scale of Yang et al. (2017); (2) economic benefit: using the scale of Tussyadiah (2015); (3) trust benefit: using the scale of Yang et al. (2017), (4) satisfaction: using the scale of Hennig-Thurau et al. (2002), (5) trust: using the scale of Dagger et al. (2007), (6) commitment: using the scale of Yang et al. (2017), (7) loyalty: using the scale of Yang et al. (2017). All of these questions are designed on the Likert scale - A type of psychometric response scale in which responders specify their level of agreement to a statement typically in five points: (1) Strongly disagree; (2) Disagree; (3) Neither agree nor disagree; (4) Agree; (5) Strongly agree. The use of this scale aims to measure the absolute differences between values and levels of perception or evaluation of respondents.

4. Research Results

After conducting data analysis using SPSS 22 and Amos 20, statistical results showed that the majority of customers in the sharing economy with Uber and Grab as the transport sector are aged 15–34 years (Figure 1; Tables 1 and 2). In which, the majority of customers are students, employees, and office workers with 32%, 23%, and 26%, respectively. The majority of customers have high income (income ratio from 5–10 million VND per month) accounting for 32%. Besides, when being asked about the purpose of use, up to 87% said for travel and 13% said for transportation purposes. For students, this decision is often taken by parents (going to school as well as when going out). People over 35 have a stable income and own a car, so their use of this service is quite low. Meanwhile, people aged 13–34 are people with high travel needs and have a decent income of 5–10 million.

Figure 1: Results of the Structural Model

Table 1: The Results of Analysis of the Adjusted Convergent and Discriminant Validity

Table 2: Relationships in SEM

H1a: Social benefits positively affect customer commitment.

Social benefits of customers stem from relationships with employees, including the recognition employees give their customers, hospitality, and friendship between customers and employees (Gwinner et al., 1998). For example, when booking a Grab/Uber ride, a customer will have direct interaction with the driver. During the ride, they can talk and befriend each other, because of which customer develops a positive (good) attitude towards Uber. On the other hand, commitment is described as a positive attitude towards the service providers (Newman & Werbel, 1973). Therefore, social benefits have a positive impact on commitment.

H1b: Social benefits positively affect customer satisfaction.

In reality, when booking a Grab ride to a particular destination, if drivers are hospitable and enthusiastic, customers feel comfortable using the service. Customers can befriend drivers, which has never happened before when using the service of other providers. Thanks to this, they have a deeper understanding of and highly appreciate the service quality. Social benefits are built on the relationship between the employee providing the service and the customer (related to satisfaction). Therefore, in the sharing economy, the number of social relationships between customers and providers go up leading to increased satisfaction of customers in the services provided by the service provider.

H1c: Social benefits positively affect customer trust.

Social benefits are expected to have a positive impact on customer trust, however, the results show that social benefits do not positively impact customers. In the sharing economy (transportation services such as Uber or Grab), the influence of social benefits is not enough to impact customer trust. For example, the relationship between employees and customers gets worse if Grab/Uber drivers are hostile towards customers during the ride (This was reported by customers through in-depth interviews, and at the same time, it appeared on news). This triggers disappointment and negative feedback from customers, and thus, they lose their trust in service providers.

H2b: Economic benefits positively affect customer satisfaction.

H2c: Economic benefits positively affect customer trust.

When customers join the sharing economy, they expect to save more time and money leading to customer satisfaction and trust. For example, Grab and Uber have many discounts that traditional motorcycle taxi services do not have. Service providers always keeping their promise when serving customers is one of the important factors for customer satisfaction and trust. In particular, service providers keeping the promise of economic benefits for customers is the key to build trust and loyalty of customers (Dagger et al., 2007). Therefore, we can see that social benefits affect the trust and satisfaction of customers in the sharing economy.

H2a: Economic benefits positively affect customer commitment.

Yang et al. (2017) defined commitment as customer’s engagement or continuous obligation to buy the same product or use the same company. It is the customer’s desire and effort to maintain a relationship with the company. When customers join the sharing economy, they will save more money. For example, the use of technology in ride hailing services (when a rider/customer “hails” or hires a personal driver to take them exactly where they need to go) helps customers to reduce transportation costs compared with other means of transportation such as traditional motorbike taxis and taxis. As a result, they tend to reuse the service frequently. Therefore, economic benefits affect the commitment of customers in the sharing economy.

H3b: Trust benefits positively affect customer satisfaction.

H3a: Trust benefits positively affect customer trust.

Customers believe in what service providers in the sharing economy say, such as a commitment to getting to the right place (pick-up point and destination), moving quickly, and providing accurate pricing information. But through in-depth interviews, when using Uber and Grab services, drivers often drive fast, go in the opposite direction as well as skip red lights, which makes customers feel nervous when using the service. This can lead to customers not trusting the company. Therefore, even with the benefits of reliability (such as the right location, speed, and accurate pricing information) customers do not trust the company and are not satisfied with the services.

H3c: Trust benefits positively affect customer commitment.

Although it is mentioned that reliability benefits are expected to have a positive effect on customer commitment, the results after testing are the opposite. The more customers trust (like the service will be delivered as promised), the more they expect from the service provider (such as forcing the service provider to always comply and even a minor mistake will disappoint them). On the other hand, no service provider can fulfill all the wishes that customers expect, because human wants are unlimited. Therefore, when customers are not satisfied with the benefits they get from the service providers, it will be difficult for them to create a business relationship.

H4: Satisfaction positively affects customer loyalty.

Satisfaction does not have a great impact on customer loyalty. When a customer is satisfied with one provider, if another provider is offering superior value, it is quite easy for the customer to switch to the new provider. For example, a customer using Grab service, even if he/she is satisfied with what this service provider offers, in some cases, he/she does not use the service provided by Grab. For example, when customers want to travel to many places simultaneously, they will not book Grab but instead, they will use a traditional taxi because when using Grab’s service, they can only go to one destination. If they want to travel to many places, they need to book a new schedule. Therefore because of the inconvenience, customers will switch to using the rival service despite their satisfaction.

H5: Commitment positively affects customer loyalty.

Previous research indicated that commitment is one of the key elements that measure the loyalty of customers and predict the purchase frequency in the future (Morgan & Hunt, 1994). The result of this research indicates the same thing. When customers have an actual affection for the service provider, they hardly opt for other providers. In an in-depth interview with customers having used Grab, they said that when they had taken a traditional taxi or a motorbike taxi, they became estranged from the drivers because they were impolite and wanted the customers to pay more for the ride. Since Grab was launched into the market, customers have a better attitude towards taxi service. For example, customers can know the exact cost of the service or give a review of the attitude of the driver after a trip, which has never happened before. As a result, customers become more interested in using the service which the providers in the sharing economy offer. Consequently, customers use the service of the provider frequently and they are less likely to turn back to traditional taxi services. This has proved that commitment positively affects the loyalty of customers in the sharing economy.

5. Conclusion

Based on the survey data of 380 customers in Vietnam, the research results show that two independent factors positively impact commitment and satisfaction: social benefits and economic benefits. Economic benefit has a positive effect on satisfaction while trust benefit has a negative effect on commitment. Commitment has a positive impact on customer loyalty in the sharing economy. As a result, companies in the sharing economy can identify which are the key factors that strongly influence customer satisfaction, commitment, trust, and loyalty to help managers to devise the appropriate solutions for promoting the strengths or overcoming limitations to contribute to perfecting and improving the quality of services.

Specifically, on the factors and variables observed in the research model, the process of processing and analyzing data is done carefully and objectively in four main stages: (1) analysis of the reliability of scales by Cronbach’s Alpha coefficient, (2) analysis of EFA, (3) analysis of CFA, and (4) analysis of the model using structural equation modeling (SEM). Finally, the research model was identified with 19 observed variables. In particular, the prefix group consists of three elements: trust benefit, economic benefit, social benefits; the suffix group consists of four elements: commitment, trust, satisfaction, and customer loyalty.

Regarding the relationship between the factors in the research model, after conducting data analysis using SPSS 22 and Amos 20, the results showed that there are two factors that directly affect customer commitment: social benefit (B = 0.58, P = 0.002) and economic benefit (B = 0.22, P = 0.08). Besides, there are two factors that directly affect satisfaction: social benefit (B = 0.24, P = 0.04) and trust benefit (B = 0.44, P = 0.08).

Trust benefit influences customer trust (B = 0.60, P = 0.013). In addition, commitment influences customer loyalty in the sharing economy with a standardized regression weight of B = 0.67 & P = 0.002, and satisfaction influences customer loyalty with a standardized regression weight of B = 0.143 & P = 0.06. Hence, the trust benefit strongly influences customer trust and satisfaction in the sharing economy (followed by the social benefit). Economic benefit also has an impact on satisfaction and commitment in the sharing economy but with a low rate.

Currently, the transportation market is extremely competitive in the sharing economy in Vietnam. The number of companies in the sharing economy is constantly increasing both in quantity and quality making customer loyalty a vital issue. Hence, improving the quality of employees should be considered because customers will have direct contact with employees when using the services and gain certain social benefits from that.