research proposal

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How could ride sharing companies survive in the long run

as a growing alternative to traditional taxi service?

Student Name:

Student ID:

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Table of Contents Table of Contents .......................................................................................................................................... 3

1.0 Introduction ............................................................................................................................................ 4

2.0 Literature review ..................................................................................................................................... 5

2.1 Introduction ........................................................................................................................................ 5

2.2 Sharing economy................................................................................................................................. 5

2.3 Stakeholder management by ride-sharing companies ...................................................................... 6

2.4 Employee management by the ride-sharing companies .................................................................... 6

2.5 Drivers management by the ride-sharing companies ......................................................................... 7

2.6 Legal and ethical concerns .................................................................................................................. 8

2.7 Specific issues ...................................................................................................................................... 8

2.8 Research Gap ...................................................................................................................................... 9

2.9 Objective and research questions ....................................................................................................... 9

2.10 Chapter Summary ............................................................................................................................. 9

3.0 Research Problem ................................................................................................................................. 10

4.0 Methodology ......................................................................................................................................... 11

4.1 Research Design ................................................................................................................................ 11

4.2 Participant Sampling ......................................................................................................................... 12

4.3 Survey Structure ................................................................................................................................ 13

4.4 Questionnaire Design ........................................................................................................................ 14

4.5 Data analysis ..................................................................................................................................... 14

5.0 Research Budget and Timeline ............................................................................................................. 14

5.1 Gantt Chart ........................................................................................................................................ 15

References .................................................................................................................................................. 16

Appendix ..................................................................................................................................................... 20

Table of figures

5

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1.0 Introduction

Ride sharing has emerged to be one of the most prominent subsets of sharing economy or

collaborative consumption, which has been defined as “the peer-to-peer-based activity of

obtaining, giving, or sharing the access to goods and services, coordinated through community-

based online services.”(Hamari, Sjöklint and Ukkonen, 2015). The concept of sharing economy

had existed long before the advent of the internet. However, the confluence of the concept of

collaboration sharing with technology provided a stimulus to the idea and enabled it to achieve

the scale required for effectively challenging the traditional models.

The sharing economy has disrupted various facets of modern life including housing, clothing,

merchandising and so on. While the concept of sharing economy housing sector gave rise to

ubiquitous Airbnb, transportation sector turned out to be the flag bearer of collaborative

consumption with the likes of Uber and Lyft giving a stiff competition to traditional

transportation model (Reisch, 2017). With the scale, came the challenges which had not been

faced by the collaborative economy so far. Many of these challenges are related to the use of

technology in providing such shared services, while other challenges belong to social and

regulatory areas. This paper specifically seeks to address some of these challenges and find the

solutions to them, in order to enable the business model of ride-sharingcompanies to become

more robust. The paper will use stakeholder approach to determine the possible solutions to

various challenges such as the inherent reasons which have made ride sharing such a success.

However, despite its stupendous success, the ride-sharing companies still have to gain the trust

and confidence of the general public. Another related issue concerns the creation of a business

model which lets the business adhere to the concept of collaborative consumption while also

enabling it to generate profits to ensure the sustainability of the operations.

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2.0 Literature review

2.1 Introduction

The chapter of the review of literature will aim to explore the studies which have been previously

conducted on the issues related to the long-term survival of the public ride-sharing companies.

The review will try to identify the specific dimensions of the conceptual and theoretical

backgrounds which are applicable to the issue of long-term sustenance of the ride-sharing

companies. In the present context, there is only a limited published literature on the long-term

sustenance of the ride-sharing companies, and thus, the study will rely on the existing available

literature in order to get the insights on the ride sharing’s usage situation and potential impacts.

2.2 Sharing economy

The concept of sharing economy was first popularised by the on-demand transportation platform

(Katz, 2015). According to Heinrichs (2013), the sharing economy represents a socio-economic

system which has been built around the sharing of physical resources by the humans. The

ecosystem of the sharing economy is coupled with the new and innovative technologies which

provide substantial social, environmental and economic benefits by a reduction in the

environmental impacts and cutting down the resources (Mohlmann, 2015). As the ride-sharing

companies developed the concepts of sharing economy, the trend has now been diffusing into the

other sectors such as food & beverage, hospitality, etc.

For the long-term survival of the ride-sharing companies, it is important that the business creates

and maintains a constructive relationship with the customers and the investors and move towards

keeping the customers and the investors satisfied in a responsible and ethical manner.

Figure 1:(Sharing economy ecosystem)

Source: (Cusumano, 2015)

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The ride-sharing companies are the most prominent examples of the sharing economy. The on-

demand technological aggregators such as Uber provide the services which allow the consumers

to connect with the verified nearby drivers who are willing to drive them for the rates which have

been set by the service (Cusumano, 2015). This is in essence that the concept of ride-sharing

strives to achieve a better economy of idle resources such as the personal vehicles and matching

them with the spare capacities of the riders who need to reach from one point to another.

2.3 Stakeholder management by ride-sharing companies

The management of the stakeholders is the critical component for the long-term survival of any

business organisation. According to Garvare and Johansson (2010), the stakeholder can be

referred to as any individual, group, or an organisation with interests in the project or program

and are affected by the outcomes of the project. Therefore, stakeholder management is the

process of systematic identification, planning, analysis and implementation of the various actions

which have been designed in order to engage with the stakeholders. Achterkamp and Vos (2008),

stated that in the case of ridesharing companies, the major stakeholders are the employees of the

operations team, the drivers who are the owners of the vehicles and also act as the supplier, the

riders who are the end customers and the government which regulates the policies for the ride-

sharing companies. It is vital for the ride-sharing companies to protect the interests of the

stakeholders in order to survive in the long run.

2.4 Employee management by the ride-sharing companies

The operations team of the ride-sharing companies are their heart and soul. For an effective

stakeholder management, the operations team needs to their global product and localise it to the

assigned market (Schaltegger, et al., 2012). This helps them in creating economic opportunities

for thousands of their associated drivers. In addition, it makes transportation accessible and

cheaper for their riders. As per Cohen and Kietzmann (2014), it is vital for the ride-sharing

companies to continuously work towards improving the experience of the riders through a higher

driver availability. Also, it needs to streamline the process and minimise the costs which are

associated with the supply side of the business. The study by Tham (2016), highlights that the

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ride-sharing companies need to work with the data for monitoring the behaviour of the drivers

along with the ride sharing experience of the in order to ensure efficiency through product

improvements.

2.5 Drivers management by the ride-sharing companies

The study by Wallsten (2015), highlighted that the drivers of Uber are not considered as their

employees, but as their contractors. It was found that Uber had distributed $675 million to

drivers in the first quarter of 2014, in the USA (Wallsten, 2015). The study also noted that Uber

drivers treat the job as a compliment job because of the flexibility of the work, not the fast

income. This trend highlights that Uber cannot keep most drivers, in the long run, to serve for the

company. Moreover, the study by Cannon and Summers (2014), indicated that the drivers of the

ride-sharing companies pay for their cars. It includes not just purchasing the cars but also on

maintenance, insurance, oil changes, etc. (Gloss, et al., 2016). If the overall costs of maintaining

the vehicles are reduced, the hourly pay of the drivers reduces considerably. The organisation has

also been accused of falsely representing the earning potential of the drivers.

Furthermore, the study by Rogers (2015), stated that one of the most common safety concern in

the transportation industry is insurance. Generally, full-time professional drivers, who drive on

company business, are covered by commercial insurance, which distinctly costs more than

personal liability policies. On the other hand, the rest of the ridesharing drivers do not fit into this

traditional framework because they work on a part-time basis and are not covered by the

commercial insurance (Henten & Windekilde, 2016). As a result, the driver’s personal policies

would be excluded from coverage of any injuries or damage occurred while a ride sharing. This

shows the exposed risk on the drivers, passengers and third parties in the new ride-sharing

industry that are not sufficiently insured. (Martin, 2016). Thus, there are multiple issues which

the ride-sharing organisations will have to resolve in order to develop the long-term sustainable

business model.

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2.6 Legal and ethical concerns

As per Rauch and Schleicher (2015), the business practices implemented by ride-sharing

companies especially Uber face substantial legal challenges in many countries. Even though the

company’s position themselves as the application which connects the riders with the drivers and

has no control over the hours worked by the drivers, but there have been several instances where

the ride-sharing companies act more like an employer (Posen, 2015). Moreover, the structure of

the employee contract by Uber has been challenged in the court in many countries and this is

expected to change the way business will be done by the ride-sharing companies in the near

future. In addition, Feeney (2015) discovered that Uber taxi drivers enjoy an advantage in

accessing the profile of the passengers along with the users’ tracking location. This could be a

hidden danger as the profile may contain some personal information of the users. There have

been cases of personal privacy concerns where the drivers have recorded the contact details and

photographs and tried to contact the persons personally rather than professionally (Cohen

&Sundararajan, 2015). It is vital for the ride-sharing organisations to prevent any kind of ethical

or legal concerns as it may severely damage the reputation of the brand and reduce the

preference of the riders towards the brand.

2.7 Specific issues

According to Belk (2014), the business model of the ride-sharing companies has disrupted the

existing business model of the traditional taxies and is more likely to prosper in the future. The

creative value of such a business model has been estimated high. However, with rapid

developments in the field of technology will require the business model to adapt to multiple

changes in order to survive on a long-term basis (Schor, 2016). As per Gansky (2010), it is

critical for the ride-sharing companies to thrive with new ideas and innovations so as to better

themselves and also work towards the development of new business models. For an effective

stakeholder management, it is vital that the ride-sharing companies ensure that the social

ridesharing is more fun, friendly and provide a great experience to both the riders as well as the

drivers.

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2.8 Research Gap

Even though the previous researches conducted to highlight the need for effectively managing

the stakeholders for the long-term survival of the organisation, a research gap can be felt in the

development of a stakeholder approach, which can help the ride-sharing companies sustain

themselves for a longer time period. There is a need for the researchers to develop a stakeholders

approach to social responsibility and social performance for the ride-sharing companies. There is

a need to maximise the interests of the stakeholders through minimizing the cost, enhancing the

value returns to the drivers as well as the riders and contributing towards the development of the

community for long-term sustenance (Freeman, 2010).

2.9 Objective and research questions

Based on the review of the literature, the objective of the research is to identify and recommend a

sustainable stakeholders approach model which can be implemented by the ride-sharing

companies for their long-term sustenance. In order to achieve the primary objective, the

following research questions have been developed.

 What are the motivations and obstacles related to ridesharing?

 How can ride-sharing companies earn the trust and confidence of the public?

 What changes will the ride-sharing companies have to implement in their business model

in order to make it more sustainable?

2.10 Chapter Summary

This chapter of review of literature explored the various scholarly articles and texts for

determining the issues related to the long-term survival of the public ride-sharing companies.

Moreover, the literature review also explored the different stakeholder’s concerns which the ride-

sharing companies need to address. Overall, the review of the literature has explored the key

theories and the specific factors for determining the stakeholders approach for sustenance for the

ride-sharing companies.

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3.0 Research Problem

Sharing economy and ride sharing are emerging concepts. Both the fields are still in the nascent

stage and hence, are plagued by a number of issues. In order to keep the research work compact

and productive, this paper seeks to explicitly identify the problem areas. The first issue is to

identify the various factors which motivate various stakeholders to participate in ridesharing

initiatives. Such motivations and obstacles need to be studied from the viewpoint of different

stakeholders (Chan and Shaheen, 2012). The paper will specifically focus on two types of

stakeholders which are the drivers and the riders. This issue becomes more pertinent as the ride-

sharing companies are now global in nature. Major ride-sharing companies such as Uber and

Lyft are working in a number of countries with diverse cultural practices (Ravenelle, 2017). It is

important to understand the cultural differences in order to increase its employee satisfaction.

Similar measures are important for ensuring the best possible experience for the customers as

well. Another important aspect is to ensure the high-quality experience and it is equally

important to ensure the safety of these stakeholders too.

The second part of the research will involve reaching out specifically to the customers of the

ride-sharing companies. The paper seeks to find the ways ride-sharing companies can win the

trust of their customers. Despite the meteoric rise in the use of share ride services, people are

still skeptical about such services (Belk, 2014). Various concerns which hold people back from

availing these services include concerns about the quality of services and concerns about the

safety. The paper aims to identify the issues and look for possible solutions to enhance the trust

level of customers. As the collaborative economy is highly tech oriented, the paper seeks to find

the tools which may help ride-sharing companies in achieving their goals.

The third issue to be studied relates to redesigning of the business model for the ride-sharing

companies. The prominent companies in this sector are consistently running losses and bleeding

money (Wirtz and Tang, 2016). While these companies have no obligations to make their

accounts, it is widely known that such companies have not been able to generate income from

their operations, which threaten their long-term sustainability. Apart from meeting the

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requirements of their various stakeholders, these companies are also required to generate profits.

There is also a social aspect to their current loss-making. These companies have high costs,

primarily due to massive discounts offered by them. Ride-sharing companies have been able to

capture a large portion of market share from the traditional taxi services by offering substantial

discounts to their customers. Currently, these companies are being funded by venture capitalists.

However, in order to ensure the long-term survival of the concept of ride sharing in general and

of the ride-sharing companies in particular, it is important to come up a business model which

generates a sustainable level of income, while adhering to the value system of collective

consumption.

4.0 Methodology

4.1 Research Design

The research will take the form of a questionnaire which will ask its responders to provide their

input to the questions asked. This form of research methodology has the advantage of reaching a

large number of audience in an economical manner. The questionnaire will be sent electronically

to reach a larger number of participants (Lefever, Dal and Matthíasdóttir, 2007). It will be

supplemented with personal interviews. The survey will also endeavour to sample a varied

population group to eliminate the chances of bias.

While online questionnaire survey has several advantages, there are certain shortcomings as well.

The foremost issue that such questionnaire does not provide any incentive for the respondent to

devote their time to filling it out (Cantrell and Lupinacci, 2007). It is highly likely that the

respondent may choose not to answer the questionnaire. Another shortcoming associated with

online questionnaire is that it does not allow for complex questions i.e. the questions are required

to be simple, so as to ensure that the respondent understands the question properly. However, it

also has the inherent risk of making the questionnaire too simplistic. Such online surveys also do

not provide the proper identity of the respondent. For this purpose, the questionnaire will

incorporate certain questions to ensure that the study has diverse participation in providing

unbiased opinion. At the very same time, the online questionnaire has many advantages attached

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to them as well. This method of data collection has the advantage of being economical. Sending

questionnaire across through electronic media or email costs a lot less than other methods such

as interviews. This method also provides the opportunity to add additional information to make

sure that the respondent understands the questions properly (Rattray and Jones, 2007). Various

additive data can be provided in the form of graphs and pictures. Such questionnaires are also

useful for reaching out the respondents spread across a geographical region. This helps in

gathering a more representative group of respondents.

The online questionnaire will be supplemented by personal interviews. As illustrated above,

online surveys have inherent drawbacks. Using personal interviews will help overcome such

drawbacks and make the research process more robust. Personal interviews have the advantage

of having a higher response. Once a personal interview is conducted, it has better chances of

being completed than an online questionnaire. Another advantage associated with the interviews

is that it may lead to additional information which is not covered by the questions included in a

structured survey (Gill et al., 2008). The interviews are also more amenable to be conducted for a

longer time, leading to better information. On the other hand, personal interviews are more

resource-intensive (Hunt and McHale, 2007). The interviews not only require more time, more

energy but also more expenses. Keeping these pros and cons in view, the study chooses to

combine two methods of data collection which are an online questionnaire and personal

interviews. The various respective advantages and shortcomings of these methods will help in

creating a more balanced database of responses.

The survey aims to collect data from 150 respondents. In order to allow for the fair study of

section 1, it will be ensured that there is an adequate representation of drivers. Therefore, it will

be endeavoured to ensure that data is collected from minimum 50 drivers.

4.2 Participant Sampling

The target of the study is to collect data from a diverse group of people belonging to different

age groups, gender, and economic status. It will also be ensured that these people had

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participated in ridesharingwithin the past one month. Keeping in view the budget and resources

constraints, the study will use convenience sampling, where a substantial portion of data will be

collected by surveying and interviewing students on the campus (Francis et al., 2010). The

remaining respondent will be collected through referrals. The study requires the input of 150

respondents, with minimum 50 responses collected from people engaged as drivers with ride-

sharing companies. The questionnaire will be posted on the website Survey Monkey and social

media such as Facebook and LinkedIn.

4.3 Survey Structure

Designing an optimum questionnaire is important for the successes of the study. The

questionnaire will be divided into four sections which have been demonstrated below:

1) Preliminary Questions: These are the questions which will be used for screening the

respondent. The section will ask questions to determine the age, gender, and occupation

of the respondent (Hair, Bush and Ortinau, 2009). It will also determine the nature of the

respondent’s interaction with the ride-sharing firms. This part will be important as the

study will require fair representation of both the drivers engaged with the ride-sharing

businesses as well the customers utilizing the services of such firms. It will also

determine the time of their last interaction with ride-sharing businesses. This is done to

ensure that the data collected is up to date in its nature.

2) Determining Motivations and Obstacles: This portion will contain the questions which

seek to find the reasons behind people engaging with ride-sharing firms. The study

mainly targets two types of stakeholders viz. the drivers and the customers. The same set

of questions will be provided to each type of respondent. However, they will not be

required to answer the questions which are not pertinent to their type of relationship with

the ride-sharing companies. The potion will also seek to find the factors which hold these

stakeholders back.

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3) Concerns about Ride Sharing: This part will ask the questions to find the shortcomings

of the concept of ride sharing. Again, this part will have questions targeting both the

drivers and the customers. The respondent will be asked to answer the questions relevant

to them. If a person falls in both the categories then they may answer all the questions.

The purpose of this section is to find problem areas for ride-sharing companies.

4) Designing a Viable Business Model: This section will be common for both classes of

respondent as it will contain the questions seeking the respondents’ recommendations for

increasing the reach of ride-sharing firms in the society. The recommendations will be

used for designing a business model which will ensure long-term survival of the

companies engaged in the business of providing ridesharing service.

4.4 Questionnaire Design

The questions included in the survey will be mainly multiple choice questions. Depending on the

context, such questions will allow for picking more than one answer. While the use of multiple

choice questions may lead selection bias (Harland and Holey, 2011) but the use of this method

also helps to streamline the answers, making them more amenable to tabulation and processing.

It also provides guidelines to the respondents, helping them to provide more relevant answers.

4.5 Data analysis

The data will be tabulated using IBM SPSS Statistics for their robustness as well as for their

economic value. The use of tool will not require any capital outlay and hence will help in

keeping the research budget under control.

5.0 Research Budget and Timeline

The study has been designed to ensure that it may be carried out with minimal possible

resources. The main emphasis will be on receiving the data through an online platform.

However, in order to overcome some of the shortcomings associated with the method of online

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surveying, a few personal interviews will also be conducted. Both the methods may be conducted

using minimal resources. No compensation will be paid to either the survey participants or to the

interview participants. This will be done to keep the costs down. Additionally, it will also help in

minimizing any chances of selection bias.

5.1 Gantt Chart

Task Duration (days) Start Date End date

Gather literature review 5 4th Sep 17 9th Sep 17

Develop research structure 5 10th Sep 17 15th Sep 17

Develop interview questions 2 16th Sep 17 18th Sep 17

Run survey and interview tests 2 19th Sep 17 21st Sep 17

Identify interview respondents 1 22nd Sep 17 22nd Sep 17

Set up interview times 1 23rd Sep 17 23rd Sep 17

Conduct interviews throughout this period as

planned 10

1st Oct 17 11th Oct 17

Import interview data 3 12th Oct 17 15th Oct 17

Conduct surveys throughout this period as planned 12 16th Oct 17 18th Oct 17

Import survey results into Excel 2 19th Oct 17 21st Oct 17

Complete data analysis 7 22nd Oct 17 29th Oct 17

Begin to build research report 3 1ST Nov 17 4th Nov 17

Meet with supervisor to discuss report draft 1 5th Nov 17 5th Nov 17

Finalise report 13 6th Nov 17 19th Nov 17

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Appendix

Questionnaire

Section 1

Question 1: Please identify your gender :

a) Male

b) Female

c) Others

Question 2: Please tick your age group:

a) 15-25

b) 26-35

c) 36-45

d) 46-55

e) 56 or above

Question 3: Please identify your occupation:

a) Student

b) Employed

c) Retired/ not working

Question 4: Please identify nature of your interaction with ride sharing service:

a) Driver with ride sharing services

b) Customer

c) Both

d) Neither

Question 5: When was your last interaction with a ride sharing service?

a) Less than a month ago

b) a month ago

c) More than a month ago

Section 2:

Question 1: if you are a ride sharing customer, how often do you use this services?

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a) Once a day or more

b) More than once a week but less than once a day

c) More than once a month but less than once a week

d) Less than once a month

c) Not Applicable

Question 2: If you are a driver with a ride sharing service, then identify the level of your

interaction

a) Part-time gig

b) Full time driver with ride sharing services

c) Not Applicable

Question 3: Is ride sharing your main mode of traveling?

a) Yes

b) No

c) Not Applicable

Question 4: What is (are) the main reason(s) behind choosing ride sharing service?

a) Economic

b) Time-saving

c) Safety

d) Other (Kindly specify) …………

e) Not Applicable

Question 5: Why do you choose to engage as a driver with a ride sharing service?

a) Flexible working hours

b) Good pay level

c) Contribute towards sharing economy

c) Other (Kindly specify)…….

d) Not Applicable

Question 6: Do you think ride sharing has positive impact on environment by reducing pollution?

a) Yes

b) No

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Section 3:

Question 1: How was your last experience with a ride sharing service?

a) Very pleasant

b) Pleasant

c) Unpleasant

Question 2: If you are a customer, how likely are you to refer your acquaintance to use ride

sharing service?

a) Very likely

b) Likely

c) Unlikely

d) Very unlikely

e) Not applicable

Question 3: Kindly identify the reasons behind your referral decisions

a) Pricing structure

b) Quality of services

c) Adherence to time

d) Other (Kindly specify)

Question 4: If you are a driver, how likely are you to refer your acquaintance to start driving with

a ride sharing service?

a) Very likely

b) Likely

c) Unlikely

d) Very unlikely

e) Not applicable

Question 5: Kindly identify the reasons behind your referral decisions

a) Compensation level

b) Working conditions

c) Motivational factors

d) Other (Kindly specify)

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Section 4:

Question 1: As a customer, which factor change will increase your level of satisfaction with ride

sharing services?

a) Better charges

b) Timeliness

c) Higher safety factor

d) Other (Kindly specify)

Question 2: As a driver, which factor change will increase your level of satisfaction with ride

sharing services?

a) Improved compensation level

b) Better incentive system

c) Enhanced skill development opportunities

d) Other (Kindly specify)

Question 3: As a customer, what do you want in the deals and incentives offered?

a) More discount deals

b) Same level

c) Less discount deals

d) Other (Kindly specify)

Question 4: As a driver, what changes would you want in incentive system?

a) Higher variable pay, low fixed component

b) Same level

c) Lower variable pay, high fixed component

d) Other (Kindly specify)

Question 5: Kindly add your additional comments pertaining ride sharing services here.