We now see a variety of companies the reflect the sharing economy (aka collaborative economy). The basic premise is that people own less and share more. You use Uber instead of owning a car (or owning less car) and use Airbnb rather than having a vacation place. The companies I just mentioned are making it work but also reveal how the sharing economy creates great risk. (See other posts about Uber). Airbnb is great example of increasing risk through a sharing economy. Airbnb relies upon individuals to offer and to rent places through their system. And this involves a lot of people. As the company’s slogan says: “Book unique homes and experience a city like a local.”
We can debate if legally or technically the people renting the places (hosts) are employees of Airbnb, that is not the point. The point is the actions of the hosts reflects upon the organization—for those renting a place that person is Airbnb. So, when the hosts treat the clients badly, it reflects negatively on Airbnb. The company has had problems with people who rent their properties (hosts) discriminating against those seeking to rent places. There is data from multiple sources that indicate the system has problems with racial discrimination and renting. Racial discrimination is a powerful social issue that can taint a company’s reputation and may be either a paracrisis or a reputational crisis. A recent case brought the discrimination risk to light in the media once again. Here are the basics of the case:
“An AirBnB host who made a racist comment to an Asian guest has been fined $5,000 – and told she must attend a course on Asian-American studies.
Tami Barker cancelled Dyne Suh’s booking, telling her in a message: ‘One word says it all. Asian.’
The fine was imposed due to a new agreement between AirBnB and California’s Department of Fair Employment and Housing (DFEH).
It lets the DFEH examine hosts that have had discrimination complaints.”
We see a governmental agency getting involved in the case rising the media attention to the incident. The DFEH levied a fine and is requiring other remedial action from the host. The host expressed regret for her actions and hoped there would be a positive resolution to the situation.
Airbnb co-founder Brian Chesky seemed to anticipate the risk issue when he gave the following comment in a BBC interview in 2016: “We started this company with the belief people are fundamentally good. Mostly everyone is really good, but when you have 100 million people, there are some who don’t believe in what you believe in.”
There is little reason to believe the racism issue is now settled for Airbnb.
Questions to Consider
1. Would you consider this a paracrisis or a crisis? Explain your decision.
2. What seems to be effective and ineffective about the response to this paracrisis/crisis?
3. What actions might Aribnb take to reduce the racism problem in the future?
4. What are the advantages and disadvantages or Airbnb seeming to place the blame on its host when such incident arise? Is it a sustainable strategy as incidents continue to occur? Why or why not?