Business models and experienced entrepreneurs- A quantitative analysis on the performance of carsharing firms

Abstract

While the overall carsharing industry is growing rapidly and some firms have proven to be quite successful, there are other firms that are less successful or even forced to exit the market. Little is known about the business side of carsharing and which factors influence the performance of carsharing firms. This research addresses this gap by explaining the differences in carsharing firm performance. It investigates the relationship between an entrepreneur’s education, managerial, entrepreneurial and industry experience, and business models on the performance of carsharing firms. Business model factors include generic carsharing business model types and a firm’s distance of their business model to other firms. The effects are quantitatively tested on different firm performance measures by developing a database of the German carsharing market. First, a cluster analysis is used to group firms based on business model characteristics and validate generic carsharing business models qualitatively found in earlier studies. Then, a regression analysis is used to test the effects of the entrepreneurial characteristics and business model factors on firm performance. The cluster analysis indeed validates the generic carsharing business models (round-trip, one-way, peer-to-peer), while also revealing a new cluster: round-trip cooperative firms. The results show effects of both the entrepreneurial characteristics and business models that varies for the different firm performance measures. Education is positively related to firm performance, while entrepreneurial and industry experience are partly related to firm performance. Managerial experience seems to have no effect at all on the performance of carsharing firms. The business model factors show that one-way firms tend to perform better than round-trip firms. Notably, the results showed that a firm’s larger distance to other business models increases carsharing firm performance, whereas the opposite was expected. The results imply that researchers should be careful with explaining firm performance uniformly, and take into account multiple dimensions of firm performance and the specific industry context. Moreover, the results imply that business model innovation is important for firm performance.