Entrepreneurial opportunities in an “industry vacuum”? Platforms as external enablers

Abstract Sharing economy platforms are external digital enablers of entrepreneurship, in the sense that they enable the entry of new entrepreneurs at negligible costs for very different levels of investment and engagement. However, we argue that their potential for entrepreneurial opportunities is not always the same in different “market contexts.” This study investigates how the characteristics of a local market influence entrepreneurship enacted by a platform in that specific geographic area. We study the hospitality industry and Airbnb where entrepreneurs can endogenously decide their “scale of operations.” We highlight how small- and large-scale entrepreneurs are equally driven by the perceived demand and labor market conditions; still, they respond differently to competition structure, demand quality, and opportunity costs. Interestingly, the decision to upscale from a small scale to a large scale is determined by the same economic reasoning driving entry with a large scale at first.