1. From the perspective of individual entrepreneurs or small companies, critically
analyse the significanceof the emergenceof crowdsourcing sitessuch as MTurk,
Elance-Owork (Upwork), CrowdFlower,Airbnb and others
Degree: BASM
ID: 8563664
Date: 2016/05/01

2. Table of Contents
1, Introduction ...........................................................................................................................1
2, The sharing economy and its catalysts ..................................................................................1
3, Conceptualization of crowdsourcing .....................................................................................2
3.1 Crowdsourcing VS e-Business..........................................................................................2
4, Categorization of crowdsourcing models ..............................................................................3
4.1 Recirculation of goods .....................................................................................................3
4.2 Optimizing use of assets ..................................................................................................3
4.3 Peer-to-peer production and provision of goods and services .......................................3
5, Opportunities via crowdsourcing and its major concerns .....................................................4
5.1 Opportunities for small scale enterprises via crowdsourcing .........................................4
5.2 Opportunities for web users via crowdsourcing..............................................................5
5.3 Concerns of crowdsourcing to both small enterprises and web users ...........................5
6, Disruptive effects of crowdsourcing to incumbent enterprises ............................................6
7, Evaluations.............................................................................................................................7
Reference...................................................................................................................................9
Word count: 3839

3. 1
1, Introduction
In this paper, the rising of the sharing economy is put forward at the beginning as the macro
context, in which the emergence of crowdsourcing business models take place. The major
contributing factors to the sharing economy will be investigated for a better understanding of
the dynamics of the external environment. The flourishing of various crowdsourcing models is
the best indicator that the era of the sharing economy has already made a difference. More
clarification of crowdsourcing will be exposed by comparison with the e-business model to
reveal how crowdsourcing has changed the way of consumption.
The rise of crowdsourcing and the sharing economy has created many opportunities and also
driven a lot of changes in the business world. However, opportunities are often accompanied
by challenges and threats. In the body part of this paper, different types of crowdsourcing
models are introduced first. Then a critical analysis of the significance of the emergence of
crowdsourcing to small-scale enterprises as well as web users will be discussed from both the
aspects of opportunities and concerns. By the definition of web users throughout the analysis,
it refers to a whole range of people including passive consumers, intelligent crowds or
entrepreneurs whose talents are not fully exploited or brought into play and are capable of
turning themselves into active producers by crowdsourcing opportunities. Next, how
crowdsourcing has disrupted incumbent business models is inspected, evidenced by some
strategies that have been practiced in current organizations. In the final part of this paper, an
overall conclusion of the significance of crowdsourcing is drawn and certain recommendations
for the further development of crowdsourcing are proposed for further studies.
The specific goals of this paper are as follows: Firstly, to deliver a clear and comprehensive
illumination of the concepts of crowdsourcing and the sharing economy; Secondly, to
elaborate on the significance of the emergence of crowdsourcing to both small-scale
companies, web users as well as current business organizations; Finally, to make evaluations
about the further development of crowdsourcing.
2, The sharing economy and its catalysts
The sweeping success of Uber and Airbnb is the most prominent example that the sharing
economy has already taken shape. Nowadays, wherever people go, they can book their rooms
and pay for everything days ahead of their departure on their smart phones. Their rooms are
not provided by hotel chains but instead by local families. People can also order a car to pick
them up wherever they are and whenever it is. These cars are not operated by transportation
companies, but they are privately owned cars. All these transactions can be done very quickly
just by few clicks on your phone screen. This is how the sharing economy works. People rent
houses, cars, office spaces, parking spaces, operation facilities, or even some other intangible
assets directly from each other, coordinated by the internet. Consumers don’t have to own a
car to get to their destinations any more. Owners can also make extra income by sharing their
underused resources, which are of high valuewith their peers.There arealmostno transaction
fees incurred, enabled by the advanced technology platforms. The core of the sharing

4. 2
economy is that the ownership is not as important as it used to be, what matters more has
moved to be the access to assets (Rick, 2016).
As PwC partner Celine Herweijer described, ownership is old school. The sharing economy is
all about consuming in a different way. It’s all about sharing and renting rather than buying or
owning things in the long term. The sharing economy is being enabledby the collisionof certain
mainmegatrends,with technological breakthroughs being at the heart of the sharing economy
(PwC, 2016). It’s those online platforms accessible from our smart phones that enable us to
create and access the marketplace of sellers, goods and services. The sharing economy is also
much enabled in many cases by the GPS technology that allows us to see where the seller is
and how far we are from accessing the goods. The other key megatrend that’s impacting the
sharing economy is around resource scarcity. In terms of the changes we are seeing in our
society with the demographic shift, there is a key situation where we are not going to have
enough stuff for everyone to own in the future. So our consumption model of today has to
change so that everyone can still have access to the things that they like to have in their
everyday life. What’s more, consumers nowadays are becoming much more knowledgeable
and aremore likelyto source trust from online peer reviewplatforms.Meanwhile,social status
is increasingly obtained through experiences rather than merely ownership of tangible goods.
That isreallythesocial conscience behind the move towards the sharing economy. (PwC,2016).
3, Conceptualization of crowdsourcing
In this paper, crowdsourcing is defined as “a sourcing model in which organizations use
predominantly advanced internet technologies to harness the efforts of a virtual crowd to
perform specific organizational tasks. Unlike the traditional outsourcing model, in which
companies manage and monitor the complex contractual processes and working behaviour of
third parties, the crowdsourcing model actively involves the virtual community in the process
of online production activities.” (Gregory, etc., 2013).
3.1 Crowdsourcing VS e-Business
In order to shed more light on the crowdsourcing model, it’s especially important to note the
key distinctions between the crowdsourcing model and established e-Business models. The
major differences lie in the changing roles of the web and web users. “Traditional e-Business
firms have their own internal staff and define their own organization. The web users are seen
as passive, external consumers of a given product or service, which is in sharp contrast with
the blurred boundaries of the crowdsourcing model. In the crowdsourcing model, web users
are seen as latent or idle visual labour force which can be inspired and elicited in order to
achieve a predefined business goal. Crowdsourcing shows aptly that the role of web users has
extended into producers of goods and services. Crowdsourcing also implies an extended role
of the social web. In traditional e-Business models, the website is considered largely as part of
the firm’s supply chain, logistics, and marketing functions for more effective procurement of
supplies as well as the supply of finished goods and services to end users. The Crowdsourcing
model instead uses Web not only as a mediumof e-commerce,but as a cost-effective platform
for production, innovation and problem solving procedures.” (Gregory, etc., 2013).

5. 3
4, Categorization of crowdsourcing models
As has been discussed earlier in the paper, due to the social changes that have been observed
in recent years that the social status is less determined by the ownership of tangible assets,
but tend to be more associated with personal experiences, which can be gained by access to
goods or services instead of by direct ownership. Driven by these social changes and the long-
standing concerns about resource scarcity, people are gradually changing their consumption
practices to what are defined as crowdsourcing models unconsciously. The innovative
crowdsourcing modelsbasicallyfall intothree categories-recirculationofgoods, optimizing use
of assets, peer-to-peer production and provision of goods and services. These new business
models have created loads of commercial opportunities for many small-scale companies as
well as ambitious entrepreneurs who are able to capture the significance of the burgeoning
sharing economy era.
4.1 Recirculation of goods
eBayis the first site devoted to the recirculationof goods. It’s a platformfor people to sell their
second-hand stuff. Now it has become an enormous entity and has been followed by many
similar followers. Due to the advanced digital technologies, there are now numerous websites
that can be used to facilitate the exchange of second-hand or underused goods. The
transaction fees have even been trimmed down to almost none.
For example, Zara is the major contributor to the fast fashion trend. Driven by the hunger
marketing tactic, fashion chasers are tempted to update their wardrobes quite frequently in
order to keep being a fashion insider. So apparel has become an especially productive area for
second-hand transactions. For example, Swapstyle.com is a fast-growing clothing exchange
site. Apart from apparel, the range of goods now being exchanged has extended to nearly the
full selection of consumers’ belongings, such as toys, books, furniture, sports equipment, etc.
The growing of the second-hand market means that everyone is a potential seller who can
swap his/her own belongings with someone else at a reasonable price, enabled by numerous
accessible digital platforms.
4.2 Optimizing use of assets
Uber and Airbnb are the best examples of optimizing use of the two most important assets-
houses and cars. In a wealthy economy, individuals and corporations can afford to purchase
valuable and durable goods that are only used occasionally, or to procure assets that are not
run to their full capacity. Examples include spare houses or rooms, occasionally used yachts,
garages, office spaces or parking spaces. Online platforms such as peer review and rating sites
have helped to mitigate trust-related issues which would otherwise be the bottleneck of this
crowdsourcing model. These innovations not only offer people with a low-cost approach to
goods, but also allow owners to “easy” extra income by the sharing behaviours. “One example
is Neighbourhood Fruit, which identifies and publicizes publically owned fruit trees and also
helps transfer excess fruit from tree owners to consumers.” (Juliet &Connor, 2014)
4.3 Peer-to-peer production and provision of goods and services
The third type of crowdsourcing model has been exploited by many new entrants. They take
advantage of the online latent labour wise and free time to help achieve the pre-determined
corporate goals in a much more cost-effective way. For example, CambrianHouse, a software

6. 4
development company. Its sourcing areas extend from initial business idea, software design to
product development. Once a community user posts a product idea online, other members
vote regularly for the best idea. Once the idea is shortlisted, the contributor is granted seed
money, which can be used to hire the crucial workforce to share and develop ideas about
software design and product development. (Gregory, etc., 2013) What’s worth pointing out is
that, this model has even extended into the sphere of social financing. For instance, Kiva.org
escapes traditional financial institutions by directly connecting lenders and borrowers with
specific digital platforms. Through such website interfaces, moneylenders and borrowers can
negotiate interest rates and other relative details directly with each other. Lenders then make
their own loan decisions and use their own finance to make the loans. (Gregory, etc., 2013)
5, Opportunities via crowdsourcing and its major concerns
Table The significance of crowdsourcing
Significance of
crowdsourcing
Small scale firms Web users
Features  Lessbureaucracy
 Limitedlong-termplanning
 Dependentonexternal
expertise
 Fewerfinancial resources,less
technical expertise andweaker
managementskills
 Developingowncompetences
and innovationcapabilities
mightbe the keytosurvival or
developmentinaglobal
competitionscenario
 Latenttalentsand
intelligence
 Free time
 Underusedassets
 Limitedresourcesand
skill portfolio
Opportunities  Organizational flexibility
 Cost effectiveness
 Easieraccess to funding
 Granular customertargeting
 Betterproductsand services
development
 Complementingthe weaknesses
of machine-operatingwork
 Cost saving
 Value capture
 Self-actualization
 Extra income
 Complementarities of
skill portfolio
 Social bonding
Concerns  Inconsistentqualityof the
output
 Informationoverload
 Outdatedregulations
 Lack of control mechanismsand
rewardstrategies
 Labor abuse
 Quasi equality
 Safetyconcerns
 Cheatedbythe fake
commentsand
reviews
5.1 Opportunities for small scale enterprises via crowdsourcing
For most small scale enterprises, they often have some characteristics in common. In small
enterprises, there are not as many explicitly laid down rules as there are in larger enterprises.
There are fewer management levels. The decision making power is largely centralized to few

7. 5
core founders. The long-term strategic planning is quite limited. They are more reliant on
external expertise and services due to the shortage of both internal staff and budgets. It’s not
easy for them to access external financial resources for corporate funding. In short, there are
fewer financial resources, less technical expertise and weaker management skills in most small
scale organizations. However, to be able to survive and develop in an increasingly competitive
globalized environment, companies must develop their own portfolio of innovative products
and have their core competitive capabilities. The emergence of crowdsourcing is critical to
them as it has brought in favourable conditions and alternative solutions for most small-scale
companies to get around such dilemmas they are facing.
First of all, by outsourcing some of the corporate projects to the wise crowd, the small scale
companies can achieve cost effectiveness by utilizing the latent crowd intelligence, while still
realizing the predetermined goals. Sometimes, they even get better results compared with
when these programs are done in-house, because sometimes the ideas generated by the wise
crowd are more innovative and constructive and only the best idea voted by the online
community members is adopted and then developed by the company. Companies also save
lots of resources and costs which would otherwise be invested in hiring, training and managing
extra internal stuff. Apart from that, due to the increasing pressures from globalization,
organizational flexibility is also one of the core organizational capabilities that a company
should cultivate, which means, it’s not necessarily a beneficiary thing when a company is
equipped with manyfixed and stable stuff. That might turn out to be a hindrance to responding
swiftly to the uncertain market dynamics. Moreover, by the advent of some crowdsourcing
financing platforms,companiesnow havemuch easier accessto external financing,whichused
to be a big headache for small organizations. In terms of product development, crowdsourcing
also benefits small-scale enterprises because of the involvement of users in the product
development or service provision processes. Companies can make more effective product
development plans by taking into consideration of precise customer insights. Taking the
crowdsourcing translation platforms as an example, crowdsourcing also complements
automatic work deficiencies by combining human intelligence together with automated
intelligence, thus delivering better services to end users.
5.2 Opportunities for web users via crowdsourcing
From the perspective of web users, Crowdsourcing enables them to access various goods or
services at a lower cost as consumers. At the same time, crowdsourcing offers them greater
chances to realize the highest hierarchy of needs, that is, self-actualization. Through
communicating and cooperating with other talented community members, they can
complement their individual skill portfolios. It’s more likely for them to tap into their potential
talents and materialize their innovative ideas compared with when they are confined to their
full-time job. Their traditional role of passive consumers has thus turned into the active role of
producers. What’s more, they can also capture more value out of the tangible assets that are
not exploited to their full value and build more social connections by the sharing initiatives
with peers who they would otherwise not be able to get into touch with before.
5.3 Concerns of crowdsourcing models to both small enterprises and web users
Although crowdsourcing has created numerous opportunities to both small scale companies
as well as web users, there are also accompanying concerns that require more considerations.
The major challenge for crowdsourcing models lies in the difficulties of control. For traditional

8. 6
business models, it’s much easier to control all the internal stuff and resources. When the
programsareoutsourced, the company usually lacksan effectivecontrol mechanism to ensure
the consistent quality and efficiency of the output. On certain occasions when the community
users submit pitch ideas, it’s often difficult for the other online community members to reach
consensus and vote for the best one because of information overload. In such crowdsourcing
models as social financing, car pooling, room sharing, the existing law system has not been
updated with particular terms to standardize and regulate these models, which is a concern to
the public, as there are potential risks if these models are misconducted, thus influencing the
development of relativecrowdsourcing models. Moreover,the engagementlevel of the online
communities is the key to the sustainability of a crowdsourcing model. However, for most
companies, only the contributor to the best idea that is selected can get corresponding
rewards,which mightbe a discouragementfor most participantsanddampen their enthusiasm.
(Gregory, etc., 2013) Overall, both the crowdsourcing companies and the local government
should come up with certain control mechanisms, reward strategies and regulation updates to
help improve the emerging crowdsourcing models.
As mentioned earlier, when there is a lack of related protection or punishment regulations,
consumers might be concerned about potential risks, as we can see from the worries of
travellers who are considering whether to stay in an Airbnb local house. Trust is a universal
concern for people all around the world and the function of advanced digital technology is
double-edged. In the virtual world, there is a high possibility that the review and comment
websites mightbe manipulatedby the operators, so web users arestill worriedthat they might
be cheated by the juggled comments online and end up getting the worst goods or services.
There is also a possibility of labour abuse in crowdsourcing models, in which the participants
get underpaid for their contributions or get discriminating contract terms due to the lack of
protection regulations for crowdsourcing workers.
6, Disruptive effects of crowdsourcing to incumbent enterprises
Crowdsourcing has been defined as disruptive business as most incumbent companies have
been challenged by it. The most typical example is that the traditional taxi industry has been
completely interrupted by Uber. This disruption is not merely confined to one industry but has
penetrated into most existing business models. Even the leading brands in the world can not
bear the risks of missing the global crowdsourcing trend. Taking Coca-Cola as an example,
which has long been renowned for keeping its formula a secret. “Coke now uses a more open
business model. Its open-sourced “Shaping a Better Future” challenge asks entrepreneurs to
create improvement. In addition, its “Where Will Happiness Strike Next?” series of short films
and TV commercials relies on the ideas contributed by Coke customers.” (Innocentive Blog,
2016) Unilever is also a typical example of taking crowdsourcing in-house. “Despite its
internationally recognized and respected research staff and facilities, Unilever recognizes the
value of collaboration with innovative entrepreneurs from outside the firm. It seeks external
contributions from intelligent entrepreneurs with useful inputs into such projects as creating
cleaning products, storing renewable products and changing consumer behaviour to
encourage enhanced sustainability.” (Innocentive Blog, 2016)

9. 7
Apart from setting a platform that brings the wise crowd to co-innovate their brands, big
brands are successfully introducing peer-to-peer marketplaces to help customers save costs
while still enjoying high-quality products or services. “Walmart creates an aftermarket to
enable its consumers to sell back their used electronics. Ford offers an innovative financing
project to encourage new customers to rent their new Ford car to peers on an online market.”
(strategist.com, 2016)
The convenience realized by accessible digital platforms in the crowdsourcing model is also
one of the major factors that have snatched market shares away from incumbent enterprises.
Leading companies are also trying to catch up by delivering more convenience through
localized crowdsourcing solutions. For example, “Whole Foods enables final-mile delivery by
partnering Instacartfor one-hour deliveryinkey cities.By giving crowd-sourcedcouriersaccess
to store data, and having a dedicated Instacart fridge in stores, these workers quickly bring
food to consumers’ homes, expanding the value promise to easy doorstep delivery.”
(strategist.com, 2016)
Overall, the incumbent organizations are gradually making inroads into in-house
crowdsourcing models to keep their marketshares, by creating peer-to-peer user engagement
platformsto increasetheir brand equity, or by launching a secondarymarketto helpcustomers
capture more value, or by localized crowdsourcing solutions to deliver more convenience to
end users. These in-house crowdsourcing projects also generates more opportunities to small
enterprises as well as web users when they are endeavouring to keep their competitiveness in
the sharing economy.
7, Evaluations
As has been discussed in this paper so far, a major contribution of this paper is the critical
analysis of the significance of the emergence of crowdsourcing to small enterprises, web users
as well as to existing enterprises. Despite of the concerns that have been mentioned, the idea
of crowdsourcing has already changed the traditional way of consumption and production.
Whether the existing enterprises are willing or prepared to embrace the disruptive business
model, most of the leading brands have already moved into in-house crowdsourcing. What’s
more,in spite of the safety or other concerns, most web users have alsotried and arestill using
the sharing model over the absolute ownership model majorly out of cost or convenience
concerns, as can be inferred from the huge success of Uber and Airbnb.
The emergence of crowdsourcing has indeed created many opportunities to small enterprises
and web users. As Carl Esposti, founder of crowdsourcing.org, recently stated, “The
crowdsourcing market is growing at an accelerate d rate with the venture capital community
investing nearly £300 million in CSPs in 2011 alone. What’s more surprising, large enterprises
with revenues above £1B are nearly adopters of crowdsourcing; however, there is still
significant untapped opportunity for crowdsourcing penetration across the board.”
(crowdsourcing.com, 2014) From the societal perspective, the whole world will be a better
place, as the concern of resource depletion won’t be that imminent and threatening if more
and more people are transferring to the sharing model. For instance, as Uber CEO said, people

10. 8
don’t necessarily have to own their own cars by the improved and enriched services offered
by Uber drivers in the near future. If there are fewer cars running around the city, such related
problems aslimitedparking spaces,trafficjamsandenvironmental issues will alsobe less grave.
Moreover, web users can make more value out of their own tangible and intangible assets,
which not only helps them relieve their financial burdens, but also facilitate their personal
development. At the sametime,asconsumers, they getbetter products and servicesat a lower
cost out of the fierce competition activated by the disruptive business model.
The next step for crowdsourcing should be the cooperation between the threeparties involved
—the government, the enterprises, and the crowd, to tackle relative concerns which might
influence the development of crowdsourcing. On the side of the government, certain
regulationsshould be proposed in order to standardize differentcrowdsourcing models aswell
as to reduce public concerns about potential risks. On the part of the enterprises, certain
reward mechanisms need to be in place in order to keep the online community members
engaged consistently. Moreover, a systematic control system is necessary to ensure the
consistent efficiencyand effectivenessof the work done by external communityworkers. From
the perspective of the crowd, they should take an activeroleas individual auditor to contribute
genuine feedbacks and reviews of the services and products to crack down the manipulation
of such online review and comment platforms, thus creating a more open and trustworthy
innovative model. However, how the incumbent businesses should cope with the treats posed
by the flourishing of crowdsourcing is still worth further considerations and researches.

11. 9
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