Growing user base in the early stage of sharing economy platforms: An integration of competitive repertoire and institutional legitimacy theories

Abstract

Sharing economy platforms are pressed to rapidly grow user bases at the early stage by aggressively targeting potential users through competitive actions. Due to the volatile nature of the sharing economy and its disruption to industry norms, these platforms encounter legitimacy challenges that impede user base growth. This paper integrates competitive repertoire and institutional legitimacy theories to develop a research model that explains early‐stage user base development in the sharing economy. We posit that the early‐stage user base is associated with structural characteristics of the competitive repertoire, whose effects are moderated by a platform's socio‐political legitimation efforts that address stakeholders’ regulatory and normative concerns. Using a comprehensive sample of 4644 monthly observations of 129 sharing economy platforms in China, we find that the volume of two context‐specific competitive actions, offering economic incentives and staging high‐visibility events, along with competitive repertoire complexity, are positively related to the platform's early‐stage user base. We also identify a significant negative relationship between repertoire differentiation and user base. Direct relationships are moderated by socio‐political legitimation, however, such that legitimation weakens the positive impact of context‐specific action volume but enhances those of repertoire complexity and differentiation. Managerial and practical implications are discussed in light of the findings.