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How incumbents respond to competition from innovative disruptors in the sharing economy—The impact of Airbnb on hotel performance

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  • Hung‐Hao Chang
  • D. Daniel Sokol

Abstract

Research Summary This article investigates the impacts of Airbnb on hotel demand and the price and nonprice response strategies of incumbent hotels to Airbnb. We constructed a unique dataset of tourist hotels and Airbnb listings before and after the entry of Airbnb in Taiwan. We found that the entry of Airbnb makes the hotel industry more heterogeneous. Low quality hotels compete on price with Airbnb after Airbnb's entry. In contrast, prices and the investment in service quality increase for high quality hotels. These findings suggest that high quality hotels reposition themselves in the higher end of the lodging market as a response strategy to the entry of Airbnb. Managerial Summary Incumbent hotels can use a number of strategies to respond to Airbnb's entry. Using a unique dataset of Taiwanese data from before and after Airbnb's entry, we found that hotels' responses differ across the value chain. Low quality hotels compete on price with Airbnb after Airbnb's entry. In contrast, prices and the investment in service quality increase for high quality hotels. The increase of investment in service quality allows high quality hotels to reposition themselves in the higher end of the lodging market.

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  • Hung‐Hao Chang & D. Daniel Sokol, 2022. "How incumbents respond to competition from innovative disruptors in the sharing economy—The impact of Airbnb on hotel performance," Strategic Management Journal, Wiley Blackwell, vol. 43(3), pages 425-446, March.
    • Handle: RePEc:bla:stratm:v:43:y:2022:i:3:p:425-446
    DOI: 10.1002/smj.3201
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    2. Van Dyck, Marc & Lüttgens, Dirk & Diener, Kathleen & Piller, Frank & Pollok, Patrick, 2024. "From product to platform: How incumbents' assumptions and choices shape their platform strategy," Research Policy, Elsevier, vol. 53(1).
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    4. Steinbach, Sandro & Graziano, Marcello & Connolly, Cristina, 2024. "David versus Goliath: The Impact of Corporate Expansion in the Alcohol Retail Industry on Small-Scale Retailers," 2024 Annual Meeting, July 28-30, New Orleans, LA 343800, Agricultural and Applied Economics Association.
    5. Klaus E. Meyer & Jiatao Li & Keith D. Brouthers & Ruey-Jer ‘‘Bryan’’ Jean, 2023. "International business in the digital age: Global strategies in a world of national institutions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 54(4), pages 577-598, June.
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    7. Lin, Chiou-Shiu & Jin, Ming & Huang, Pei-Chi & Xiao, Ran, 2023. "Does it take two to tango? The joint role of high-performance work systems and ethical leadership," Journal of Business Research, Elsevier, vol. 156(C).
    8. Syed Tariq Anwar, 2023. "The sharing economy and collaborative consumption: Strategic issues and global entrepreneurial opportunities," Journal of International Entrepreneurship, Springer, vol. 21(1), pages 60-88, March.
    9. Gala, Kaushik, 2024. "Digital Davids, global Goliaths, and the Web3 sling," Business Horizons, Elsevier, vol. 67(1), pages 5-17.
    10. Zhang, Huihui & Zach, Florian J. & Xiang, Zheng, 2023. "Design standardization by Airbnb multi-unit hosts," Annals of Tourism Research, Elsevier, vol. 98(C).
    11. Federico Boffa & Amedeo Piolatto & Evila Piva & Florian Schuett, 2022. "Industry dynamics in digital markets," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 49(3), pages 401-407, September.
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    13. Lehmann, Julian & Weber, Florian & Waldkirch, Matthias & Graf-Vlachy, Lorenz & König, Andreas, 2022. "Institutional work battles in the sharing economy: Unveiling actors and discursive strategies in media discourse," Technological Forecasting and Social Change, Elsevier, vol. 184(C).

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