Sharing and Shaping: A Cross-Country Comparison of How Sharing Economy Firms Shape Their Institutional Environment to Gain Legitimacy

New technology firms such as Uber and Airbnb have recently spurred the advent of the sharing economy (SE). Faced with institutionally diverse environments, SE firms apply various market and nonmarket strategies through which they actively legitimize their products/services. In-depth qualitative analyses of several regulative, normative, and cognitive institutions in the Netherlands, the United Kingdom, and Egypt reveal that similar institutional strategies have different effects in different country contexts. In countries with lower degrees of institutionalization, SE firms can address grand societal challenges and leverage the power they gain to shape government regulations and public perception to their advantage. In countries with higher degrees of institutionalization, firms with disruptive and transformative strategies (e.g., Uber) can provide rapid but short-term gains, whereas firms with more relational and additive strategies (e.g., Airbnb) may allow for more sustainable legitimacy gains. Furthermore, the extent to which acting locally and addressing the needs of the community lead to legitimation largely depends on whether the national government leaves the regulation of a new service or product to local authorities or takes an active role in establishing standards nationwide. These findings pave the way for a future contingency theory of country institutional environments and firm institutional strategies.Whiteboard Video AbstractAOM Video Player5827309557001