Mosey, Noke and Kirkham (2017), the term ‘absorptive capacity’ was initially introduced by Cohen and
Levinthal, which characterized it as ‘the
firm’s capacity to recognize, incorporate and make use of knowledge from the
capabilities allow the company to recognize
its resource standard and become more familiarized with the altering market
conditions so that a competitive nature can be acquired. This dichotomy can be conceptualized
as two different types of learning- exploitative learning and explorative
regulation has an impact on some of the most central markets affecting Airbnb’s
growth, innovative methods are required for development to occur. Airbnb has created an
innovation and design lab, known as Samara, with the aim of developing a new form
of travel experience (Economist,
2016). The launch of Trips was introduced, which
involved a service by which locals can provide guided tours and other experience
related activities to tourists, such as “violin creation in Paris, or marathon
running in Kenya”
just the beginning. It is the desire of Airbnb to eventually record every stage
of the travel process. In due course, Trips will be able to provide tourists
with the option to rent vehicles arrange flight bookings, make restaurant
reservations, and order groceries. In recent times, as both leisure and commercial travelers
are progressively deciding to choose Airbnb as compared to conventional hotels,
the company has the intention to provide full-suite substitutes to websites
such as Expedia and Kayak. In addition, the company anticipates that their main
selling point will be the provision of an “genuine” experience which goes along
with renting an Airbnb apartment, or at present, guided tours being booked by locals,
will assist in allowing the firm to stand out (Economist, 2016).
definitive goal is to develop from being considered as a platform for only
overnight stays into an inclusive travel agency, appealing to a larger portion
of tourists’ expenses.
Designing a change programme
1. Airbnb should be more
focused on the Chinese market. China is regarded as the largest tourism market in
the world. Last year, there were more than 135 million people traveling outside
of China. Moreover, Chinese tourists have maintained their spending
double-digit growth since 2004. The chief strategic officer and co-founder of Airbnb,
Nathan Blecharczyk, stated that “That alone is reason to prioritize it”.
However, the Chinese market is always difficult to become impacted on due to
its unique characteristics. According to Fiegerman (2017), another Silicon
Valley company, Uber experienced a loss of $1 billion annually in China before
its Chinese business was sold to a local
company (Didi chuxing).
On the one hand, Airbnb’s Chinese imitators have struggled
to develop part of the market in recent years, and have made the accommodation
sharing market more developed to become mature. However, Airbnb must encounter
the first mover advantage of its competitors though firstly developing its the
business model. Moreover, a local conpay, TuJia, is larger than Airbnb’s
listing. According to the Financial Times (2017), “Airbnb does not possess the
brand recognition in China which it enjoys in the United States,” indicated
Shaun Rein, the managing director of Market Consultancy CMR China.
Therefore, more marketing and promotional activities is required
to increase its reputation. Also, Airbnb can attempt various methods such as
testing the products for free, which will allow more people to adopt to it.
Conversely, the social credit system is still in its
progression stage, under the current society in China. The imperfect credit
system causes it to be difficult to assess the credit-worthiness of users and
landlords. Airbnb could cooperate with various popular and highly recognized
software platforms in China, such as Ant Financial, an online payment platform
with a user credit system.
In China, the price of accommodation is very expensive, and increases
continually. It is a popular way in which Chinese people uses it as an
investment. Due to the high price of accommodation, people with more than one
apartment are mainly middle-aged as a result of the high price of the real
estate industry in China. However, the elder Chinese generation is generally
slow to accept new technologies and cultures. As the result, Airbnb could attempt
to establish offline service stores in different typical cities to create offline
2. In respect of the regulation
and tax issues, Airbnb should carry out further discussion with the government.
The tax rate should be carefully argued. Low prices will eventually lead to
more advantages to compete with hotels.
An authorized system could allow hosts to list with the
government for a minute charge which might be able to account for a straightforward
health and safety check. Moreover, an authorized system can comprise of a substantial
documentation or a listing on the city’s website could be marketed more better due
to the listed host promoting their accuracy in their Airbnb accounts.
The policy and registration necessities must not be excessively onerous. In effect the procedure of revisiting
short-term rental regulations in reply to Airbnb-style services should offer a momentum
for reduction the arduous laws that usually preside over non-hotel
accommodations such as conventional B. In San Francisco, for instance,
applying for a B permit is usually thousands of dollars and entails several
credentials and hearings.
provides a scathing review of B regulations,
highlighting different destinations’ costly, inconsistent, and excessive
regulations, such as having a separate refrigerator for guests’ food, checking
and recording the refrigerator temperature every four hours, and having every
electrical appliance checked by a licensed electrician every two years.
Some regulation were designed for other types of
accommodation such as large hotels, others lack sense, and yet others are
merely revenue-raising exercises. All of them add cost and complexity to
running B?…?yet many could either be totally abolished or substantially
Once rational laws are created, enforcement will simpler
and more prudent. Enforcement can concentrate on the chief issues, including
units being unlawfully operated as full-time rentals or units that are acquiring
frequent criticisms. In comparison, standard Airbnb hosts will not have to continue
being unlawful individuals who jeopardize major fines if caught due to unfortunate
Moreover, superior authorities (e.g. US states) could make
the tax process simpler by creating a uniform tax on short-term rentals, which will
result in funds being issued or employed for tourism related marketing
Airbnb opened a new market and changed
the way that people stay away from home. It successfully built Airbnb culture.
Whether employee and hosts, they are more likely to be a family. This is a good
way to motivate employees and keep consumers loyalty. Airbnb helps stakeholders
and give advice to hosts for further improvement. However, Airbnb need to pay
attention to decrease of growth rate of lists and keep innovative. Furthermore,
regulation and tax issues need to be solve as soon as possible. Also, put more
attention into Chinese market.