Challenges of collaborative governance in the sharing economy: The case of free-floating bike sharing in Shanghai

Challenges of collaborative governance in the sharing economy: The case of free-floating bike sharing in Shanghai

Accepted Manuscript Challenges of Collaborative Governance in the Sharing Economy: The case of free-floating bike sharing in Shanghai Yuge Ma, Jing L...

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Accepted Manuscript Challenges of Collaborative Governance in the Sharing Economy: The case of free-floating bike sharing in Shanghai

Yuge Ma, Jing Lan, Thomas Thornton, Diana Mangalagiu, Dajian Zhu PII:

S0959-6526(18)31863-8

DOI:

10.1016/j.jclepro.2018.06.213

Reference:

JCLP 13359

To appear in:

Journal of Cleaner Production

Received Date:

01 December 2017

Accepted Date:

19 June 2018

Please cite this article as: Yuge Ma, Jing Lan, Thomas Thornton, Diana Mangalagiu, Dajian Zhu, Challenges of Collaborative Governance in the Sharing Economy: The case of free-floating bike sharing in Shanghai, Journal of Cleaner Production (2018), doi: 10.1016/j.jclepro.2018.06.213

This is a PDF file of an unedited manuscript that has been accepted for publication. As a service to our customers we are providing this early version of the manuscript. The manuscript will undergo copyediting, typesetting, and review of the resulting proof before it is published in its final form. Please note that during the production process errors may be discovered which could affect the content, and all legal disclaimers that apply to the journal pertain.

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Challenges of Collaborative Governance in the Sharing Economy: The case of free-floating bike sharing in Shanghai Abstract Most sharing mobility business models promise green and affordable transport in cities. However, their rapid scale-up processes have often caused significant disruption and stresses to urban governance. Free-floating bike sharing (FFBS) is highly-touted in Shanghai as a means to bring biking habits back to an overly car-congested city. Despite substantially changing the behaviour of Shanghai citizens to adopt shared bikes within a short period of time (2016-2017), the FFBS has hit a threshold of oversupply, under-distribution and user misbehaviour problems, which endanger the environmental and social sustainability of innovative urban mobility schemes. In this paper, we focus on the FFBS case study and examine how commercial, political and social actors interact in addressing the emerging public problems in the FFBS scale-up process from a collaborative governance perspective. We find that the lack of recognition and integration of new social actors, such as user groups, as agents in the scheme are key obstacles to a fully-functioning government-business-society collaborative regime. We argue that this hindrance is a function of the existing socioeconomic relations within the city. Our results suggest that the city’s government needs to be more agile to accommodate, nurture and integrate emerging social actors as governance partners in the sharing economy, in order to ensure its efficacy, resilience and sustainability. We propose an alternative governance model to improve the effectiveness of the collaborative governance regime towards urban sustainability through engaging the society in better and smarter ways in the sharing economy. Keywords Collaborative governance, sustainability, urban, sharing economy, free-floating bike sharing 1.

Introduction

Sharing is a foundational currency of social capital (Putnam, 1993) and among the oldest values and means of exchange in human society (Belk, 2010; 2014). Digital technologies and commercial capital have enabled the sharing economy to mediate sharing in new and enhanced ways through digital platforms (Sundararajan, 2016; Ritzer, 2015). As the sharing economy develops and scales up in more cities and crucial urban sectors (i.e., transport, housing, food), the level and complexity of tensions between sharing practices, current socioeconomic systems and urban infrastructures increase. While the overall impact of the sharing economy in urban systems is still evolving, city governments have welcomed it as an injection of external investment and capacity into critical services, but have to a large extent failed to recognise and address the negative effects spawned by it (Davidson and Infranca, 2015). Due to rapid urbanisation and high material consumption, cities have huge impacts on global greenhouse gas emissions (Kennedy et al., 2015). The recent rise of the internet-based

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sharing economy has triggered transformative changes in living patterns in modern cities. Particularly, the sharing mobility sector, aligned with the government strategies of clean and smart cities, promises an eco-friendlier, more accessible and inclusive transport for urban residents (Cohen and Kietzmann, 2014; Manzi and Saibene, 2017). Yet, the scale-up of the sharing mobility business models may generate negative trade-offs, including potential exacerbation of travel demand, abuse of public spaces, deepening of social inequalities and platform monopolies, undermining long-term environmental and social sustainability in cities (Frenken and Schor, 2017). Left unaddressed, these trade-offs risk becoming crippling contradictions to the potential of the sharing economy in promoting urban transformations to sustainability. Indeed, the social, political and infrastructural institutions in cities have not developed adequate capacities and norms to respond, absorb and adapt to changes brought by under-regulated commercial and technological forces embodied in the modern sharing economy (Murillo et al., 2017). The sharing economy is a contested concept attempting to incorporate conflictual organising cores such as access-based economy, community-based economy and platform economy (Acquire et al., 2017). Without appropriate responses, such tensions might lead to more exploitative capitalism (Martin, 2016). A stream of scholarship emphasises how the sharing economy exacerbates labour precarity (Standing, 2016; Ravenelle, 2017), widens income gaps (Schor, 2017), the rebounded environmental effects (Frenken and Schor, 2017) and how the current big data-centred sharing is de facto ‘platform capitalism’ striving for monopoly at the expense of sharing values (Srnicek, 2017). It is essential to consider governance strategies to mitigate the negative effects and adapt the sustainable challenges brought by the sharing economy in cities. Despite the recognition that governance is vital for coordinated and sustainable development in the sharing economy (Schor, 2016; Salice and Pais, 2017), there is a dearth of literature on the sharing economy from an urban governance perspective. Existing sharing economy literature mainly presents two governance approaches: top-down and bottom-up. The topdown governance model argues its suitability to control how people access and use the shared goods/services, in order to ensure quality of the sharing system (Bardhi and Eckhardt, 2012; Hartl et al., 2016). While the bottom-up one, such as Martin et al. (2017), argues that grassroots democratic models of platform governance should be strengthened to reduce adverse impacts of the sharing economy. Echoing the bottom-up approach, Ferrari (2016) also stresses the role of social capital as an essential element to guarantee the sustainable development of the sharing economy. In addition, local government plays a key role in terms of regulating the emerging disruptor and the incumbent (Hong and Lee, 2017). An increasing number of studies emphasise the structural tensions caused by multiple forces, which emerged with the development of the sharing economy and cannot be solved by any single actor (Frenken and Schor, 2017), so that multi-stakeholder collaboration is needed (Cohen and Kietzmann, 2014; McLaren and Agyeman, 2015; Parente et al., 2017). While both the top-down and bottom-up governance approaches are appropriate in certain sharing contexts, a systematic and integrative perspective to address the cross-sectoral and cross-level collaborations between the government, society and company/platform co-creating the sharing economy in urban contexts is lacking in the scholarship.

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To fill this gap, we use collaborative governance theory to investigate the challenges encountered in government-business-society collaborative processes in addressing the sharing economy trade-offs in cities. Collaborative Governance (CG) is an umbrella term for cross-boundary, multi-institutional arrangements between different actors from public, private and civic sectors working together to solve a certain public problem or advance a shared goal (Ansell and Gash, 2008; Ran and Qi, 2017). This stream of theoretical and empirical work has been applied widely in the field of environmental management, climate and sustainability governance and conflict resolutions (Freeman, 1997; Abbott, 2012; Crona and Parker, 2012). The CG perspective is not de facto opposed to the top-down and bottomup governance approaches, but rather emphasises the need to integrate multi-dimensional governance models to enable stakeholder collaborations when tackling complex problems. It is this crucial aspect of the sharing economy, insufficiently addressed in the current scholarship and city-level governance, that we address in this paper. We focus on two questions:  What are the key challenges for effective CG towards social and environmental sustainability emerging during the sharing economy scale-up process?  How CG can be improved in specific sharing economy context in cities? We answer these questions through an in-depth case study of a representative free-floating bike sharing (FFBS) scheme in Shanghai, China, among the most-rapidly developing sharing economy businesses in the world. The paper is organised as follows: section 2 lays out the analytical framework we use, section 3 elaborates the rationale of the case study context and introduces methods and data, while section 4 presents the empirical analysis. The discussion in section 5 builds on the critical analysis of the empirical data, highlighting the importance of new social actors and the reconfiguration of social relationship in the FFBS that can benefit CG. Section 6 provides the conclusions, implications and limitations of the study. 2. Analytical framework Collaborative governance (CG) as a strategy has been used by governance scholars and practitioners for decades to explore solutions of cross-boundary governance problems, but without a clear analytical framework to explain its mechanisms, especially the collaborative dynamics. Emerson et al. (2012) proposed a pioneering integrated framework of CG that provides a broad conceptual approach for situating and exploring components of CG systems, ranging from policy or programme-based intergovernmental cooperation to place-based regional collaboration with nongovernmental stakeholders to public-private partnerships. This integrative framework consists of three nested dimensions, representing the general system context, the CG regime (CGR), and its collaborative dynamics and actions. In this framework, the system context generates opportunities and constraints that influence the development of the CGR over time. The CGR itself encompasses ‘the particular mode of, or system for, public decision making in which cross-boundary collaboration represents the prevailing pattern of behaviour and activity’ (Emerson et al. 2012: 10). Then, principled engagement, shared motivation and capacity for joint action comprise three interactive

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components in a dynamic mechanism to constitute and sustain the CGR in relation to a desired socio-ecological system. To date Emerson et al. (2012) represents the only integrative analytical framework in the field of CG studies. It is thus useful to apply this perspective to the governance issues in the sharing economy as it relates to sustainable social-ecological systems. Due to the inherent multi-stakeholder characteristics in urban sharing economy, CG would normally be initiated once the new sharing practice passes the early development stage. For instance, the city often plays a key role in driving various sharing innovations and adapting them to its vision and infrastructure, as well as nurturing its developments (Cohen and Kietzmann, 2014; Ma et al., 2017). However, sustaining effective CG in the sharing economy is particularly challenging because the practice of sharing is by nature a distributed and comparatively open system that not only involves numerous stakeholders, especially ‘the crowd’ (understood as opposed to the core institutions and professionals), but also generates complex interactions and collaborative dynamics that may constantly challenge or reconfigure socio-economic relationships in a society (Sundararajan, 2016; McAfee and Brynjolfsson, 2017; Parguel et al., 2017). These new features embodied in the modern sharing economy have posed threats to the proper functioning of CG to accomplish its desired outcomes. Therefore, we focus our research on the challenges of making a newly formed CG work to achieve its sustainable development goals in the sharing economy. We will explain briefly how and why such a CG emerged in a particular city and sharing context (Section 3.1). Yet the main analysis will be organised surrounding the key dimension of sustaining a CG – the Collaboration Dynamics - of the above integrative framework. The three pivotal components of the collaboration dynamics constitute an analytical tool to identify key barriers towards cross-boundary and multi-stakeholder collaborations in our case analysis (Emerson and Nabatchi, 2015), which will guide the empirical analysis are elaborated below based on Emerson et al. (2012): 





Principled engagement means ‘getting the right people on the table’, so that through open and constructive conversations, actors with different views, interests and identities can work across their respective institutional and sectoral boundaries to solve problems and to create shared values. In our analysis, we identify three major groups of stakeholders – business, government and society, especially sharing business users and the general public whose lives are influenced by the sharing business. Thus, principled engagement refers to integrating key actors from the aforementioned stakeholder groups in governance processes during the scaling up of sharing businesses, which defines the enabling environment for the rest of the collaborative dynamics. Shared motivation is defined as a self-reinforcing cycle consisting of mutual trust, understanding, internal legitimacy and commitment, which highlights the interpersonal and relational elements of the collaborative dynamics. It is crucial to sustain the newly formed principled engagement towards a virtuous cycle of cross-sectoral collaboration. In the context of our study, the shared motivation is synchronising the FFBS with the city’s sustainable transport development plan, which helps to reinforce the governmentbusiness-society engagement. Therefore, we assess how existing and new actors’ evolving participation in the CG influences the aforementioned shared motivation, and how they affect the virtuous cycle of collaborative dynamics. Capacity for joint action refers to a collection of cross-functional enabling elements that

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come together to create the potential for taking effective action towards a common goal. Those elements include formal and informal procedural and institutional arrangements, leadership, knowledge and resources. Such capacities should be newly generated during principled engagement processes, and stimulated by the shared motivation, in order to form a positive and complete dynamic of CG. In our case study, this analytical component investigates how diverse actors develop new relationships, resources, institutions and cultures to support or inhibit the realisation of the shared motivation through principled engagement. It should be noted that ‘[t]he quality and extent of collaborative dynamics depends on the productive and self-reinforcing interactions among principled engagement, shared motivation and the capacity for joint action’ (Emerson et al. 2012: 17). Therefore, we place the focus of the analysis not only on each of the three components of the collaborative dynamic individually, but also their interplay. Further, we explore the challenges encountered in forming and sustaining a positive interaction mechanism towards the synergy between the sharing economy and sustainable cities.

3. Case study context and methods We use a qualitative case study approach (Flyvbjerg, 2006) to assess the challenges with the above three interactive components for collaborative dynamics during the scale-up process of the sharing economy. In this section, we explain the background and rationale for choosing a FFBS in Shanghai, China as a case study (3.1) and the data collection methods (3.2). 3.1 Case study context The FFBS is a dockless bike rental service; each bike contains a microchip that enables the unit to be located anywhere within the cities’ government-planned bike parking areas, using a mobile phone-based app. Generally, bikes are equipped with a unique LBS (Location Based Service) system, electric generation equipment and theft prevention mechanisms. Through the mobile app, users can unlock the bike and are charged automatically according to the time of use. FFBSs provide a practical solution to the ‘first/last mile problem’ for urban commuters using green transport. In contrast to existing small-scale, station-based bike sharing systems, FFBSs are unconstrained by inflexibility and tedious registration processes. In this respect, FFBSs have been revolutionising urban travel and potentially creating a niche to transform the current unsustainable trajectory of the transport sector towards sustainability (Cohen et al., 2016; Mair and Reischauer, 2017). Since its launch in Shanghai in 2016, FFBSs have fundamentally changed travel behaviours, urban living and socio-economic relationships in Chinese cities (Lan et al., 2017). It has become the main short-distance travel mode in the city within two years. The timing of the FFBS as a disruptive innovation in Shanghai’s transport sector coincided with the production and launch of its current master plan, Shanghai 2035, which aims to build an innovative and sustainable city. At the national level, since the 11th Five Year Plan (FYP, 2006-2010), Low-Carbon Development has become a national strategic priority in China (Qi, 2014 and 2015). Despite problems in transitioning through its complex policy

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process, overall, China has succeeded in setting a decarbonising trajectory (Qi et al., 2016). Alongside national level decarbonisation, Chinese cities are also going through major changes towards more sustainable and low-carbon development paths (Bai et al., 2014). Shanghai is one of the pioneer cities to implement and advance this agenda, signalled by its new master plan prioritising sustainability and innovation over traditional economic and employment growth. Within this broader context of low-carbon development in Shanghai and China, the government has been rapidly developing public transport, and at the same time controlling car ownership and promoting electric vehicles, in order to support the city’s advancement towards sustainability (Ma et al., 2017). However, long-standing transport problems, such as long commutes, traffic jams, air pollution and overcrowded public transport, continue to affect the wellbeing of Shanghai’s more than 20 million inhabitants. Within FFBS, we focus on Mobike, the first and most successful company operating a FFBS in Shanghai. It currently provides 25 million rides in more than 200 cities across the world on a daily basis, an unprecedented scale-up since its inception less than two years ago. When Mobike company started to operate FFBSs in Shanghai in April 2016, both the general public and the government saw it as an opportunity to help solve ‘the first and last mile transport’ problem that had prohibited people from relying on public transport, especially the metro system for daily commuting. Mobike gained swift popularity among Shanghai citizens during the city’s strategic shift from rapid economic growth towards sustainable transport and better quality of life (WRI and Mobike, 2018). Therefore, the case of Mobike provides a nexus to map out the evolution of business-government-society collaborative dynamics within the urban social-ecological system of Shanghai, China. The Chinese FFBS phenomenon is worth studying also because it showcases distinct features common in other sharing and app-based enterprises around the world. First, it was purely initiated and run by private companies, and has attracted over 2.2 billion USD of venture capital (VC) in multiple rounds of fundraising.1 Second, in contrast to most public bikesharing schemes around the world, the VC-fuelled Chinese FFBS prioritises economic interests and/or expanding the business eco-system towards future business opportunities (Murillo et al., 2017; Salice and Pai, 2017). Third, it relies on ICT, public goods and virtuous consumer behavioural norms to maintain its efficacy and efficiency. These structural features, however, have also brought controversies, such as tensions between commercial goals and the nature of public goods (road and parking space) and services (low-carbon transport), the convenience and flexibility provided by the system vs. the misbehaviours observed, as well as fierce market competition through wild expansion (bikes flooding the cityscape) vs. the scarce public urban spaces (to park and ride, etc.). These controversies and tensions emphasise the need for multi-stakeholder collaboration to ensure the proper functioning of FFBSs and to synchronise its commercial goals with urban sustainability governance goals (Lan et al., 2017; TUPDI, 2017). 3.2. Data collection 1

https://www.economist.com/news/business/21731675-one-answer-would-be-ofo-and-mobikemerge-chinas-bicycle-sharing-giants-are-still-trying [21 Feb 2018 last assessed].

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We collected primary data through interviews and stakeholder workshops, participatory and non-participatory observations. In total, 30 interviews were conducted between June 2016 to November 2017 with representative actors in the sharing mobility sector in Shanghai. The actors include co-founders and management teams of the main companies, policymakers in the transport-related departments of municipal administrative and regulative bodies, representatives of government and university think tanks specialising in sustainable development, as well as management and strategy teams in major automobile companies in Shanghai. In addition, we conducted 40 interviews with active Mobike users, querying their interactions with the business, government and social stakeholders. The selection of interviewees was grounded in the principle that all these actors are stakeholders that have a substantive function in the CG of Shanghai’s sharing mobility economy and need to be taken into account. Researchers from the team also attended major multi-stakeholder meetings between business, government, consumers and other stakeholders in Shanghai between June to December 2016, and participated in the major user group’s online and offline activities between August 2016 to July 2017, in order to conduct in-depth observations, build contacts, and interact with CG stakeholders. The interviews were semi-structured and focused on three aspects of CG between multiple stakeholders:  Key stakeholders in the sharing mobility economy and their role in tackling the problems and disruptions encountered with the FFBS and other schemes;  The dynamics of cross-boundary collaborations happening in the sharing mobility sector over time;  The outcomes of the cross-boundary collaborations in the sharing mobility economy and the challenges encountered in solving system problems such as oversupply, distribution, allocation of public resources, and so on. To supplement this interview data, additional data was gathered from a variety of sources, such as company information, public sources on sharing mobility government policies and plans in Shanghai and urban China, business and media reports, to gain a holistic perspective of the case and to triangulate the interviewees’ statements with researchers’ observations and documentary evidence. 4. Analysis We divide the analysis into three parts according to distinct development phases of FFBSs in Shanghai, which are: Stage 1 (Section 5.1): Emergence (April – December 2016) Stage 2 (Section 5.2): Scale-up (January – October 2017) Stage 3 (Section 5.3): Reconfiguration (November 2017 – present) For the first two stages, we explain key developments concerning CG, followed by unpacking, one by one, the dynamics of principled engagement, shared motivation and capacity for joint actions among three key stakeholder groups (business, government, society) – Mobike, venture capitalists, Shanghai municipal and district governments and social actors such as

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active user groups, academics/think tanks and the general public. Since Stage 3 is still evolving, we will briefly analyse the relevant key characteristics that have emerged so far. 4.1 Emergence Stage (April – December 2016) The emergence of FFBSs in Shanghai was marked by Mobike launching its first batch of bikes on city streets in April 2016. Within eight months, in December 2016, Mobike announced it had deployed 100,000 bikes in Shanghai at a stakeholder meeting. The meeting, initiated by Mobike in conjunction with our research team and Tongji University, brought together major stakeholders from the government and civil society, including academics, media professionals and active user groups to discuss how FFBSs can enable cities to realise low-carbon transport goals and citizens’ wellbeing. Issues of CG between the government, civil society and market players featured prominently and were intensively discussed. We thus identify this meeting as the watershed event between the emergence stage of FFBSs in Shanghai and its massive scale-up process. 4.1.1 Principled engagement During this period, Mobike was the main driver to stimulate the ‘rules of the game’ for principled engagement between various stakeholders, especially with the government and the users. As a start-up with a professed commitment to sustainability, they wanted to establish clear principles and an enabling environment for achieving win-win sustainable development gains for government, consumers and the company. Mobike and the government Since its launch in April 2016, Mobike has been actively urging collaboration with the government to pave ways for successful development of FFBSs. Interview data with Mobike’s co-founders show that the principled engagement between the company and the government was initiated by the company to solve problems encountered during the FFBS development process: ‘In the beginning, as a private company, we thought we could provide FFBS alone because we had the technology. We wanted to showcase that start-ups can make a contribution to the public good. But as FFBS develops, we realized that we could not solve a lot of problems without the government. For example, in many parts of the city, there is no bike parking space! We have to get the government on board to make FFBS work.’ - Joe Xia, CTO, Mobike, June 2016 In June 2016, two months after Mobike placed the first bike in Shanghai, Mobike organized a news conference announcing a partnership with Yangpu District government to promote FFBSs as an important component of the area’s low-carbon transport system. Since then, Mobike has been seeking government support especially for allocating more bike parking resources and reducing policy uncertainty over the sufficiency of urban infrastructure to support the rapid development of FFBSs. In addition, Mobike also creatively cultivated channels of communication with the government seeking policy support for future FFBS

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operational needs, sometimes through social actors such as influential academic and media figures. Mobike and active user groups The fast development of FFBSs also exacerbated problems of user misbehaviour such as theft, vandalism and illegal parking, undermining the sharing values and public space resources that FFBSs require to operate efficiently. In response to this negative reciprocity, a selforganised group among Mobike users emerged to help mitigate these problems. This group of active Mobike users, who deem themselves ‘Hunters’, originally were from Shanghai but now are spread all over the country, voluntarily re-park bikes in an orderly fashion and sanction anti-sharing behaviour in order to maintain the efficacy of the bike-sharing economy. Lan et al. (2017) as well as our interview data suggest Hunters’ behaviour is based on moral values and a strong sense of virtue, reciprocity and the public good. As a constituency, the Hunters are keen to interact with Mobike through its app and offline user activities to contribute to its mission of FFBSs and to the emergent CG. Mobike had also been seeking to incentivise such virtuous behaviours among individual bike users via credit-earning schemes for reporting misusers (who, correspondingly, may be penalised). Collectively, bike hunters were also invited to participate in the stakeholder workshops organised by Mobike in December 2016, evidencing the company’s recognition of their emerging niche and potential further role in the evolving CGR. 4.1.2 Shared motivation A shared motivation generated from the principled engagement aims to synergise the FFBS development with Shanghai’s sustainable transport system goals. FFBS and the city As noted above, the emergence of FFBSs overlaps with the process of crafting the current Shanghai Master Plan Shanghai 2035, which coined green development as the key vision of Shanghai’s future development. Low-carbon transport systems, especially public transport plus biking and walking, have been identified as main development areas. From the beginning, Mobike had been synergistically aligning its business vision with the city’s vision. Local governments in Shanghai saw the opportunity FFBSs brought about for low-carbon transport and similarly showed strong reciprocal support by endorsing Mobike as an official partner for the low-carbon city development. Meanwhile, academics and think-tanks also backed FFBS’s synergy with the city’s transformation to sustainability vision. Such a shared motivation was clearly formed and demonstrated in the December 19 stakeholder workshop, when a collective win-win statement between Mobike and influential government think-tanks was published, endorsing the FFBS as a transformative innovation for sustainability: ‘The FFBS enables the city’s transformation to sustainability and breaks the locked-in transport structure in Shanghai, which combines the feature of tech and sharing. The main goal of Shanghai 2035 is to achieve more than 85% green transport in all travelling. In this way, FFBS gives the faith and direction of the Shanghai planners and officers.’

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– Chen Xiaohong, Professor at Tongji University and Shanghai Urban Planning Commission advisor, Dec 2016 Mobike and Users Mobike’s growing user groups benefitted from the company’s convenient and cheap services and generally were motivated to support Mobike. However, most users were not involved to the extent of sharing the sustainability vision of Mobike. Only the active user groups, such as the Hunters, responded to Mobike’s vision and endeavoured to co-create the motivation and CGR necessary to realise a cleaner transport system and better urban living through FFBSs. For example, a bike hunter indicated: ‘I like Mobike because it is doing something good to the city. I want to see it succeed so I am helping!’ - Sun Shiyue, Mobike user, Oct 2016 4.1.3 Capacity for joint action New capacities for joint action thus were forming in the emergence period due to the strong shared motivation of synchronising FFBSs with Shanghai’s sustainable city vision, as well as the positive principled engagement. Yet joint capacities mostly were formed bilaterally between Mobike and other stakeholders, while multilateral collaborations were missing. The lack of engagement with society affected the collaborative dynamics negatively, though its consequences were not salient until the scale-up process. Mobike and government As a result of close interactions with the government and the shared vision for sustainable transport, the government and Mobike successfully conducted joint actions in terms of allocating biking lanes and bike parking spaces for FFBSs in cities - the dedication of public resources to enable FFBSs. In addition, the police also began to act to enforce sanctions on misbehavour by penalising user misbehaviours. For example, some users faced criminal charges for intentionally damaging or stealing the sharing bikes. Government-business collaboration in the FFBS thus has significant improved with evolution of the CGR. With the police enforcement, the general public started to realize that FFBSs are protected by institutional rules. Mobike and users Mobike has sought to improve its online credit system in order to reflect users’ behaviour in the sharing system, including rewarding the online reporting of damaged and/or wrongly parked bikes and penalizing misbehaviours. This process was considered by active users as a unique way of jointly solving problems with the company: the online credit system has set effective behavioural economic incentives for users to contribute to the proper functioning of FFBS as value co-creators (Lan et al., 2017). For example, one bike hunter indicated:

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‘The sharing bikes are for everyone’s good, not for single one. The rules of how to use the FFBS are very important. My intention of reporting is not only to punish misbehaviours, but to remind other users the meaning of sharing. This is a learning process for the whole society. I hope I can contribute in my capacity to support the system.’ - Xjy, the Mobike user, Oct 2016 4.2 Scale-up Stage (January – October 2017) The success of Mobike triggered domestic and international VC interest in investing further in FFBSs. Investors were emboldened by observed changes in mobility behaviour towards adoption of sharing bikes, and by the support from the local government to ensure the efficacy of the scheme, including with public resources like road space, parking, and policing. Subsequently, many investors rushed into this new business opportunity space, leading to numerous companies to launch similar FFBS schemes in the city and fiercely increasing competition for market share. Between January to August 2017, 13 new companies flooded Shanghai with more than 1.7 million shared bikes. By June 2017, more than half of Shanghai inhabitants registered with FFBS. The oversupply of shared bikes created a serious strain on public resources. Massive numbers of bikes were dumped in public spaces, exacerbating existing crowding and stress on the city’s roads and parking spaces. These very public problems alerted the government and other stakeholders to the need to respond to the unintended tragedy of the commons consequences of under-regulated FFBSs. 4.2.1 Principled Engagement Pressured by the VCs’ growth strategy, FFBS became highly controversial since January 2017. All actors were forced to react to the dramatic and unforeseen development of the FFBS based on their own interests, without sufficient time and space for further collaborative governance development. The pioneer FFBS companies, including Mobike, were fully occupied in responding to fierce market competition and expanding market share through flooding the urban space with more and more bikes. Over that period, Mobike lost its leadership position in advancing the CG towards urban sustainability, and government and consumers began to push back. Mobike and the government Government’s initial support for Mobike was interpreted by the market as a huge business opportunity that led to over-investment, over-competition and over-supply in FFBS within a short period of time, and finally to severe trade-offs. Facing the flooding of shared bikes in urban public spaces, the government, especially at district level, swiftly shifted its attitude towards FFBS, and began unilaterally removing shared bikes to mitigate the bike flooding problem. The government did not even inform the companies of such actions beforehand, much less collaborate; rather it took action first then penalised the FFBS companies for misuse of public areas. Clearly, the principled engagement formed during Stage 1 had collapsed. ‘Those FFBS companies dropped their bikes without any notice in advance. The district management officers just confiscated the disorderly placed bikes without being able to

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control the number. They asked FFBS companies to pay the penalties to redeem their confiscated bikes. But many FFBS companies didn’t show up even when the government wanted to talk to them.’ -An anonymous government officer, Apr 2017 Mobike and active user groups Once fierce competition ramped up, the engagement between users and companies also began to deteriorate. Instead of nurturing the positive interactions with active user groups to improve the sharing environment, Mobike became fully focused on expanding its operations to more cities. Despite media campaigns and an online credit system to reward users’ value co-creation behaviours, the positive interactions between active user groups and Mobike were not fully mobilised; at times consumers even subverted the behaviour economic incentives. For example, Mobike’s Red Pocket Bike strategy was conducted to encourage users to activate ‘zombie’ bikes - bikes unused for a long time or wrongly parked. But this strategy was manipulated by some users to earn money at the expense of value co-creation. Some users deliberately rode FFBS bikes to remote areas, in order to ride them back to operating areas for rewards. Also, the active user groups resisted the free riding marketing policy, for this would bring too many low-quality users. In sum, these moves, far from achieving Mobike’s ostensible goal of nurturing green-win development through positive consumer bike sharing behaviours and cultures, instead achieved only the objectives of the VC firms gaining more registered users and rides through the relentless pursuit of market share via free ride offers and bike flooding. ‘I’m willing to pay for every ride. The free riding marketing policy worsened the misbehaviours in my area because people took it for granted! I don’t like it at all! I may quit reporting misbehaver if Mobike continues this policy.’ -Yu, the Mobike user, Mar 2017 4.2.2 Shared Motivation During the FFBS development process, bike sharing companies, the government and active user groups got increasingly familiar with each other as stakeholders in the emerging sharing mobility economy, but their relationship was far from being a ‘reasonable, predictable and dependable’ condition for trust building towards shared motivations (Emerson et al. 2012:13). Without sufficient trust, all parties found it difficult to comprehend and respect others’ positions and interests in realising the synergy between FFBSs, sustainable transport and green development more generally. In Stage 2, the self-reinforcing cycle for shared motivation between key actors failed to sustain. Mobike and VCs During the scaling-up process, Mobike was confronted with excessive competition from other FFBS companies less concerned with sustainability than quick profits. The fear of losing market dominance led it to comply with the stark pressure from VCs to win the market competition. Mobike quickly adjusted its drive from ‘bringing bikes to the city’ to ‘becoming number one in the FFBS market’. In fact, this period witnessed Mobike’s shift from sharing a

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long-term vision with the city (sustainable transport) to prioritising the short-term business interest with its VC financiers. The government, bicycle industrial association and academic/think-tanks The dramatic externalities of the FFBS altered the government’s attitudes completely. Especially at the local level, district governments started to treat FFBSs as threats of public order and condemned it for pursuing commercial interest. Meanwhile, the government placed trust in more traditional bicycle industry associations and academics to craft improved FFBS regulations. Despite the shared motivation to mitigate the negative effects of FFBS’ scale-up, the long and struggling standards-making processes of FFBSs exposed multiple conflicts over different parties’ preferred pathways. Significantly, the bicycle industrial association prioritised safety over durability, insisting on compulsory replacement of FFBS bikes every three years. While the academics stressed the circular economy principles that FFBS companies should ensure each bike’s lifespan for as long as possible. Active users, general users and the general public Lacking sufficient support and recognition from either the company or the government, the active user group continued their efforts to nurture a better sharing environment, yet have failed to enlarge their influence. Our online observations show that the Hunter group’s growth stagnated during this period. The Hunter group endeavoured to cultivate internal legitimacy for their actions through self-organisation, yet its impact was minimal among other users and the general public. Meanwhile, the number of FFBS users increased. By June 2017, more than half of Shanghai inhabitants registered with Mobike. Most users were spoiled by the excessive supply of cheap FFBS and not incentivised to help in maintaining the system, so misbehaviours increased. Moreover, the general public became annoyed with FFBS’s crowding-out of public spaces, footpaths and blind tracks, resulting in massive complaints against the scheme. 4.2.3 Capacity for Joint Action The initiation of the CG for FFBSs in Stage 1 grew out of the consensus that a desired outcome – sustainable transport – could not be generated by any single actor involved in the FFBS. During the scale-up process, collaborative initiatives were observed on all fronts, yet none of these developments were strong and stable enough to achieve effective governance through government – business – society collaborations. In particular, the attempted joint actions in this stage did not encompass sufficient key cooperative dynamics, including leadership, knowledge co-production, policy development and resource sharing, to institutionalise collaboration. The government, Mobike and active users Despite the government’s rhetoric on the importance of three-party-governance (government, business, users) – ‘san fang he zuo’, in Chinese official language, in practice the city government has not fully integrated active user groups in dealing with the problems of FFBS.

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During this stage, numerous policy consultations were held by the government with the purpose of engaging the business sector to better manage the rapid development and illegal parking issues caused by the eruption of bike sharing. However, the government focused on instructing companies with statistical targets, such as setting a limit on the lifespan for the bikes and minimum maintenance staff ratio for the number of bikes deployed. Issuance of such top-down target-oriented policy measures hardly constitutes cultivating norms of reciprocity to enable cross-boundary collaboration. It was not until August 2017 that the government clearly sought to set up procedural or institutional arrangements to ensure a government-led and market-supported CG framework. Notwithstanding this move, user groups and the public continue to be largely neglected in the evolving governance model, being ‘represented’ by either the government (the general public) or business (the users). Similarly, despite the attempt to integrate user groups into decision-making processes through organising online and offline user engagement activities, Mobike still lacked capacity to respond to the dramatic growth of users simulated by its VC-fueled scale-up period. Meanwhile, the active user groups have produced a group of leaders seeking to craft norms for themselves, only to find their leadership and initiatives hardly recognised by the government or by the company. Yet, lacking the adequate resources, active user groups could not lead joint actions beyond their small circle. 4.3 Reconfiguration Stage (November 2017 – Ongoing) Starting in September 2017, some FFBS companies went bankrupt (i.e., Kuqi, Bluegogo). About the same time, some FFBS companies were also accused of misusing and/or refusing to return users’ deposit, scandalising the emerging sector. This series of negative events, along with the tightening of government regulations, triggered VCs to stop investing in FFBSs in late 2017. Since none of the FFBS companies were financially self-sufficient, scale-up turned into a rapid cool-down, further affecting stakeholders. This signalled the end of FFBS’s expansion process, and the beginning of the reconfiguration stage – in terms of sharing practices and collaborative relationships and policy development between the key actors. The government The government officially launched the Shanghai FFBS Development Guidance in November 2017, committing government to the role of the of providing sufficient urban infrastructure, policy development and planning frameworks to enable FFBSs to realise the city’s low-carbon vision. Mobike and its competitors The new Guidance regulations unilaterally forbid FFBS companies to increase the supply of FFBS bikes in Shanghai. They are also instructed to improve the effectiveness of FFBS operations to be consistent with the city’s sustainable transport goals. Responding to this firming up of the regulatory environment, Mobike re-oriented to focus on interacting with the user groups to improve their relationship through both online and offline services such as

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fans activities and interactive forums, and to encourage positive sharing behaviours from users. Meanwhile, new technologies like SMPL (Smart Mobike Preferred Location) and intelligent parking devices were rolled out to improve collaborations with the street and district governments and avoid the ‘tragedy of the commons’ problems that had emerged in public spaces as a result of bike-flooding, competition for space and anti-sharing behaviour that threatened the common good. Active users Active Users continued to cultivate innovative channels to educate the public for better sharing behaviours and to solve the problems of abusing public spaces in the FFBS. For example, in response to the public complaints about bikes occupying pedestrian spaces, the Hunter groups undertook a voluntary campaign to re-park disorganised bikes in an orderly configuration that has become known as the ‘Hunters’ Shield’. With Mobike directing more resources to nurture the user groups (mainly the regional Hunter groups in different Mobike operating cities), the activities of active users sustained, yet interactions from the government stakeholders remained absent. 6. Discussion and key findings This empirical analysis of FFBSs in Shanghai shows a clear two-stage evolution of collaborative dynamics that are primarily driven by the principled engagement process between three key stakeholder groups –business, government and the society (i.e., users and the general public). Shared motivation is generated from the stakeholder interactions during principled engagement, which can also advance or undermine the originally desired common goals as the collaborative governance process develops. Capacity for joint action first results from the interplay between principled engagement and shared motivation. If successful, it becomes a direct force in shaping the outcomes of the CG and future collaborative dynamics. This interactive mechanism can form a virtuous cycle, yet it can also develop into negative reinforcement (sometimes triggered by new actors joining the CG such as VCs), endangering the sustainability goals of the city. As Figure 1 shows, during the emergence stage (Stage 1), the sharing business discovers and cultivates the synergy between its commercial interests (FFBS) and urban sustainability goals (low-carbon transport system) and takes leadership to initiate a CG with the government in order to realise this opportunity. This stage also marks the sharing business (Mobike in our case) engaging with user groups intensely, and the user groups in turn supporting the company’s leadership to form new capacities of joint actions. The business seeks government support because only the government can provide an enabling environment of coherent, consistent regulation, infrastructure and other resources to enable its business success (i.e., legitimacy, parking, and road resources). The wider society, seeing the benefits that sharing businesses bring to their mobility and wellbeing, also support the sharing business’ leadership for CG. However, the connection between the government and the society is weak because business tend to treat society as end consumers rather than active co-creators of value and governance.

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Figure 1 Evolution of government-business-society collaborative dynamics in the sharing economy

Note: the arrows indicate strong collective actions, while the dashed arrows indicate supportive relationships and resources not yet fully developed into resilient collaboration.

If the sharing business remains small scale, the collaborative interactions will be mainly limited to the sharing system and its respective users. Once the sharing business (FFBS) scales up (Stage 2), due to its strong synergy with sustainable purposes (low-carbon transport system in our case), the excessive-competition and over-supply generate negative trade-offs also at scale, challenging the newly developed collaborative dynamics between key actors. Trade-offs are often at the expense of public goods and the commons, a critical infrastructure which, if undermined, threatens the environmental and social sustainability of the city, leading to tensions, distrust, negative reciprocity and other barriers to full realisation of the sharing economy. During this chaotic period, it takes time for every stakeholder to figure out its position. Before that, all of the stakeholders take actions largely based on their short-term interests, which may sometimes impede the long-term sustainability goals. As depicted in Figure 1 and shown in the Shanghai case, the government may use hard regulations to impose a CG structure that makes the sharing company wholly responsible for the scale up problems. This accountability structure assumes that the government automatically represents society, so its role is regulating the sharing business rather than enabling the value co-creation in the sharing economy in partnership with business and users. Consequently, the principled engagement evolved from a dyad between businesses and users to one between government and sharing businesses. However, such collaborative dynamics proved to be incapable of achieving the goal of safeguarding the triple bottom line of sustainability benefits in cities. In fact, neither the ‘general public’ nor the ‘users’ were (and structurally perhaps cannot be) sufficiently represented by either the government or business. Rather, FFBS users characterise an independent stakeholder group in the CG regime that evolves from society’s foundational role in carrying out sharing activities. We argue that the insufficient recognition and integration of novel social actors, particularly collective action groups (as opposed to individual consumers) in the sharing economy

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represents the major challenge in fulfilling CG. From our case analysis, two causal factors contribute to this obstacle: First, the sharing business users have developed distinct characteristics beyond traditional consumers, significantly challenging the traditional understanding of market-society relationships. Thanks to the digital platforms empowering value co-creation between sharing businesses and participants, the user groups are no longer merely consumers in a market context. Rather, they have emerged to be value (i.e. low-carbon transport in our case) cocreators through novel social innovations (e.g., Mobike Hunters helping to maintain a sustainable bike-sharing environment through identifying misbehaviours and modelling correct sharing norms). Their impact has expanded from private and market spaces into public spheres (Lan et al., 2017). However, the government has not realised this reconfiguring of roles among sharing economy users in society, therefore government has neglected this important constituency and the reservoir of social capital therein, which is critical to enabling the sharing economy’s benefits to the public good and urban sustainability. Second, the sharing economy itself is a distributed system that not only decentralises resources, but also trust and other social and environmental transactions among numerous individual and institutional participants and the wider society (Botsman, 2017). This distributed system no longer fits into the traditional representational model of CG in conventional environmental management and conflict resolution (Emerson and Gerlak, 2014; Emerson and Nabatchi, 2015). In the case of the sharing economy, users not only make active and innovative contributions to the public good in public spaces, they also grow (and potentially withdraw) rapidly in numbers. For instance, there were already 13 million registered users in FFBSs among Shanghai’s 24 million residents in about one year’s operation. Thus, the integration between sharing economy users and the society becomes significant once the business scales up, as shown in our Mobike case. This strong representation of society in the user group forms an important source of social capital for nurturing a more reciprocal and sustainable sharing culture benefiting long-term urban sustainability. After Stages 1 and 2, the reconfiguration stage may either reinforce the failure or develop a new virtuous cycle of CG. Our analysis fleshes out the challenges embedded in the current sharing companies operational model, especially in the scale-up phase, where start-ups invest heavily in the digital platform for consumptive sharing. This, in turn, stimulates massive scale-up of consumption but also triggers governance issues and negative externalities. Substantive reorganisation is necessary to support a three-party collaboration for governing the excesses of disruption and misuse, as well as nurturing appropriate users’ selforganisation (like the Hunters). Our analysis suggests that, though this may be triggered by negative feedback such as public frustration and tragedies of the commons, reorganisation must be actively fostered through meaningful triangulation of the relationship between government, business and society. Therefore, we propose a more enabling relationship for CG in the reconfiguration period, which recognises the vital social capital possessed by sharing economy users as citizen stakeholders in a system that relies on virtuous behaviour to function, rather than simply consumption. This understanding forms the basis for a threeparty-partnership to support the synergy between the sharing economy and transformation towards sustainability in cities (Stage 3 in Figure 1).

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7. Conclusion The impact of the sharing economy is vastly extending from private and market spheres into public spaces in cities. Therefore, managing its sustainability potentials and trade-offs is a new and urgent urban governance challenge. Yet, effective collaborative governance on this front has not only been slow to develop in practice, but also insufficiently theorised in the literature. Against this background, our study makes several original contributions: First, the integrated CG framework applied in our analysis not only provides a critical viewpoint to assess urban sustainability governance in the sharing economy, but also reveals the two-stage evolutionary process of collaborative dynamics in the sharing economy. It demonstrates the dynamic, contingent and adaptive nature of principled engagement, shared motivation and joint actions in the sharing economy in relation to urban sustainability, and shows where effective CG can be put in place to deal with the sharing economy stressors proactively rather than reactively. Second, our analysis highlights the lack of recognition and integration of novel social practices from the user groups into the three-party-relationship to be the major obstacle for successful CG in the sharing economy. Sharing is among the most basic and resilient of human social acts and the rise of The Hunters and other action groups shows that users will self-organise to promote its efficacy. To leverage this social capital, we propose a more integrated and co-creative government-business-society relationship framework that can improve collaboration effectiveness towards urban sustainability through engaging the society better and smarter. Finally, this research provides an in-depth case study focused on governance issues of a globally prominent sharing economy phenomenon in the unique context of China. It is worth stressing that, to date, most sharing economy studies are based on OECD country experiences that neglect the distinctive development contexts of developing and transitioning countries especially as a polar of sharing economy developments. Our documentation of FFBS, its sustainability consequences in cities, as well as the social and environmental changes it has endangered, offers a substantial case of CG during rapid business scale up processes in the sharing economy. However, more comparative case studies between different cultural, economic and social contexts can help to strengthen the theorisation of this fast-evolving phenomenon. A limitation of this research is the lack of in-depth investigation of VC’s role as a vital component of the business model. Clearly the swift rise and expansion of the sharing practice fuelled by VC has not allowed sufficient time for key stakeholders and institutions to adapt to the complex situation and co-create solutions in a fully collaborative, agile and integrative way which in turn impacts the enabling of finance. The double-edged dynamics of VC – both in enabling rapid scale-up and disabling sustainability potential – need further study as a feature of the sharing economy’s development, particularly at the tipping points of the scaling up reorganisation.

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