New Business Models and the Role of Small Enterprises: The Case of the Platform Economy

During the past months, KiNNO implemented the study: "New Business Models and the Role of Small Enterprises: The Case of the Platform Economy" on behalf of IME GSEVEE. The study was carried out in the framework of the project "GSEVEE initiatives for the systematic monitoring and changes forecasting within the SMEs business environment" funded through Operational Programme Competitiveness, Entrepreneurship and Innovation 2014-2020 (EPAnEK).

The study focuses on four sectors that are directly affected by the phenomenon of the platform economy: 1. Retail, 2. Housing and accommodation, 3. Transport, 4. Catering.

Key Findings of qualitative research, in which business practices in the Greek platform economy are analyzed, are related to:

The conditions under which businesses enter the platforms
- The desire to increase revenue leads businesses to join platforms.
- No notable restrictions and conditions for entrepreneurs to enter platforms.
- The pandemic has prompted many entrepreneurs who wanted to get on the platforms to do so.
The terms of cooperation between businesses and platforms
- Businesses in all sectors of interest can participate in more than one platform.
- In all sectors, changes in the terms of cooperation are simply announced by the platforms to entrepreneurs, without entrepreneurs having any say in the changes.
- The ways in which the ranking is defined vary between industries.
- The ability of companies to price differently in and out of the platforms depends on the industry in which they operate.
The market conditions created by platforms
- Platforms create oligopolistic conditions in the market.
- The more a platform asserts its position in the market, the more aggressive it becomes in terms of the percentages of commissions it charges to entrepreneurs.
- The need for the services of a platform is positively related to the size of the geographical boundaries of the use of the platform.
Business model changes for business sustainability
- Small businesses need to adapt to the new digital reality, create stand-alone digital communication hubs with their customers, and adapt to the requirements arising from their participation in the platforms.
The institutional role of the platforms
- Platforms play the role of the institution in creating confidence in markets in situations where high levels of uncertainty are created.
- Platforms allow unlicensed providers of products and services to access a wide audience of customers.
The common places of concern between the sectors
- Not permissible price differentiation between products and services prices offered through platforms and directly by businesses
- Non-inclusion of VAT in the platforms' invoice to businesses
- No ceiling on the percentages of the platforms' procurement
- No clear business appearance ranking algorithm

Key Findings of qualitative research reflecting the domestic prevailing situation in the sectors of interest:

Platforms are considered more important for the future viability of a business by entrepreneurs who participate in them than by entrepreneurs who do not.
It is the businesses in the accommodation industry that are most aware of the necessity of platforms for their future viability.
For the most part, platforms have mitigated the impact of the pandemic on the transport and retail sectors.
The businesses participating in the platforms have developed greater levels of digital entrepreneurship.
Entrepreneurs in the sectors of interest do not know the regulatory framework of the Greek platform economy, but even those who know it do not consider it sufficient in their majority
There is competition between the platforms of each industry.
Platforms help most of the businesses that participate in them.
The accommodation and retail sectors are the two sectors that are most dependent on their presence on platforms.
The levels of commissions charged by the platforms are prohibitive for either all or most businesses in all industries.
The business appearance ranking framework is clearer in the catering and retail sectors than in the accommodation and transport sectors.
The accommodation industry differentiates the prices it offers on and off the platform in a greater percentage compared to the catering and transport sectors.
The catering industry is showing the lowest interest in platforms.

Policy proposals for the support of Green Entrepreneurship in Greek small businesses

Development of support infrastructure
- Establishment of a platform oversight body
- Creation of a structure for the provision of knowledge and education to small entrepreneurs
- Creation of trade union structures
Development of institutional and legal framework
- Ensuring basic rights of entrepreneurs working with platforms
- Elimination of unfair platform practices
- Smooth and effective cooperation between businesses and platforms
- Operation of the platforms
- Fines for platforms that violate state-imposed regulations
Provision of financial support
- Financial Incentives for the development of new digital clusters