KGRI Working Papers

Evolution of Traceability and Sharing Economies

Version1.0
October 2018

Jiro Kokuryo
jkokuryo@sfc.keio.ac.jp
Keio University Global Research InstituteThis is an unofficial translation of a paper in The Journal of Science Policy andResearch Management in Japanese. Vol.32 No.2. Translated and distributed on-line withthe permission from the journal editor. Minor modifications were made from theoriginal to address international readers.
© Copyright 2018 Jiro Kokuryo
Professor, Faculty of Policy Management, Keio University

Evolution of Traceability and Sharing Economies
Jiro Kokuryo (Keio University)
Abstract:
An analysis is offered on the relationship between traceability and sharing economy. Here,sharing economy is synonymous with “expansion of the right of use licensing (as opposed
to ownership transfer) business model.” Traceability is defined as “a state where theprinciple owner of property rights or product liability for some physical or intellectual
property is able to continuously confirm the state of the property and who is using it.”
Under low traceability environments, businesses have no choice but to use the ownershipsales-oriented business model. However, if advances in ICT realize high traceability
environments, they will be able to adopt a model in which products are not sold andtransferred, but in which only use rights are granted for a specified time in various form
including rentals. Impact of barcodes and mobiles devices are analyzed to illustrate how
traceability increased the level of sharing in supply chains.

1.

Toward an Internet of Things (IoT) Society

In this thesis, I analyze the role that the increase in the level of traceability of objects and people
brought about through ICT (information and communications technology) has been playing in the
expansion of sharing economies. Although a more rigorous definition will be provided later, thisthesis generally states that “expansion of sharing economies” is synonymous with “expansion of
the right of use licensing business model,” as opposed to the ownership transfer business model.
In addition to intermediation for personal property loans to others, the right of use licensing
business model also includes vendor property rental, outsourcing, and licensing. While theconversion of sales businesses from ownership to right of use can also be expressed as theconversion of businesses into services, it could also be argued that this conversion is the result of
improved traceability brought about through ICT. Although it is easier to imagine tangible objects,
the same phenomenon is also occurring with intangible ones. An example is how music that wasonce sold on CDs is now sold through services that allow consumers to listen to all the music theywant for a fixed monthly fee although, strictly speaking, what was sold was the medium [plastic
discs], while the music itself functioned as a license to use the CD; as a business model, however,this is extremely close to a transfer of ownership rights, and therefore is classified as such here.
The basic logic underlying how traceability will expand the right of use licensing businessmodel is explained as follows. With low traceability, when a company provides a product to acustomer, the company is unable to gain a clear understanding of the product after it is handedover, and is often unable to trace it even if the customer's whereabouts are known. In such a case,the company has no choice but to use the ownership transfer business model, in which it transfers
all product disposal rights (ownership rights) to the customer in exchange for money or someother form of compensation. However, if advances in ICT allow providers to maintain anunderstanding of who is using a product, they will be able to adopt a model in which products are
not sold and transferred, but in which only use rights are granted for a specified time, and thencan be provided to another user at a different time. Although vendors have been able to apply thismodel to certain products in the past, the development of mobile technologies and the like has
expanded the scope of traceability, resulting in the birth of services which act as intermediaries
between individuals loaning personal assets, and in the expansion of the applicable scope even in
the business marketplace. It is clear that new, major developments have occurred due to present
conditions.
When the right of use licensing model can be applied and products can be used by multiple
users, prices tend to grow comparatively slowly for users while revenues tend to increase for
product providers, in order to increase the usage efficiency of the product (asset). As thetechnology and cost potential expands, so does the usage of these products. The right of use
licensing business model has been implemented for some time—one example would be rental
vehicles. However, it would be more correct to state that advances in ICT and reduced costs have
expanded the scope of model application.
It is worth analyzing this process now, as this may suggest hints on future developments andon what kinds of issues will remain when traceability will be further improved by IoT—which islikely to continue to spread rapidly.
In this thesis, traceability is defined as “a state where the principle owner of property rights or
product liability for some physical or intellectual property is able to continuously confirm thestate of the property and who is using it.” Although this differs slightly from the traditional
definition of traceability (such as tracing the movement of ingredients as a safety measure forfood products), both concepts share the meaning of tracing the physical and logical positions ofphysical things (objects) being moved between multiple subjects. Some of the references cited inthis thesis use traceability to refer to managing the state of use of intellectual property in order tosafeguard privacy. Starting from this, I will analyze this concept in order to produce a definition
more and more compatible with the aim of this thesis.
2.

Technology and Business Model Co-evolution

In order to provide a systematic analysis of the relationships between ICT, related traceability,and business models originated from it, it is necessary to create a more general model of therelationship between technology (business models included) and social structures. In this respect,many models have been proposed. For example, classical technical technological determinism
treats technology as an independent variable and social structures as dependent variables. Social
constructivism, instead, focuses on the process through which societies apply social
characteristics to technology in order to establish how the latter should function. In this thesis, I
refer to the results of these models while constructing a model from the process by which
technology and society co-evolve, and then analyze it. This section is devoted to model
description.
2.1.

Relational Analysis of Technology and Business Models Using Intervening Variables(Technology and Business Characteristics)

This thesis focuses on traceability (which, strictly speaking, is not a technology but rather arelated function) and analyzes changes to business models through intervening variables. While
it is difficult to associate such technologies as sensors and networks, directly to business models,functional concepts such as traceability can be recognized as the primary factor that enablebusiness models. In constructing the model, first I consider how technology has improved
traceability, and then to what degree traceability has brought about changes in business models.
Figure 1 demonstrates how, rather than having a unidirectional relationship, a force could
establish a business model by working in the opposite direction of technological development.

2.2. Co-evolution of Technology and Social Systems via Bottlenecks

The issue when conducting analysis using an intermediary relies on the choice of suchintermediary. This thesis adopts the approach by Spector (2011), which focuses on constraints as
the determining factors for business models. It is likely that loosening such constraints could leadto gradual improvements, make them no longer serve as limiting conditions, and ultimately cause
the change of the entire system when other limiting conditions become the new constraints. Here,I consider constraints that could determine the structure and the performance of these types ofsystems as “bottlenecks.”
Figure 2 shows the process by which technology and social systems co-evolve, while using
bottlenecks as intermediaries. This can also be thought of as a model in which innovation causes
the society to evolve (Euchner and Henderson, 2011). First, bottlenecks resolving social issues(i.e., achieving goals) are identified (top left of Figure 2). Then, methods to eliminate thesebottlenecks are sought and discovered (bottom left). Applying this technology causes thetechnology itself and the social models to change. This eliminates or loosens existing bottlenecks,
and allows the society to advance a step further (bottom right). However, one characteristic of
this model is that it does not imply that complete bottleneck resolution at this stage. Rather, likely
new bottlenecks will need to be resolved in order to reach further evolution (top right). Awarenessof these new goals and bottlenecks is raised, and then further methods are designed to achievegoals or eliminate bottlenecks. This is a disequilibrium dynamic model in which the society neverreaches an equilibrium point.

In this model, every issue is considered with the aim of finding out where the bottleneck
elimination phenomenon driving social change is located and with what kind of technology it canbe realized—when it is likely that technology is bringing about some kind of social change. From
this perspective, technology is an enabler for social change (Venkatraman,, 1994; Love andGunasekaran, 1997).
This model suggests that there may be no impact on society, and technology may not be adopted
unless it has an effect on social bottlenecks—no matter how revolutionary the technology may be.
This also means that abandoned technologies may attract attention as means to eliminate
bottlenecks at other instances.
When the approach of enabler technologies that can eliminate bottlenecks and create new
business models is applied to the context of this thesis, the questions concern the identification ofbottlenecks and of the technologies capable of eliminating them, as well as what kinds of new
business models would be created by bottlenecks elimination in industries wherein the ownershiptransfer business model has been the mainstream until now. When this is applied in the context oftraceability, eliminating the bottleneck of customers being invisible and unable to be traced (i.e.,
no traceability) will make it possible for even more subjects to use the same assets efficiently, andto increase revenue for providers while decreasing costs for users. The significance of this will be
examined in the next section.

3.

The 20th Century Mass Consumption Society Bottlenecks of Visibility and Connectivity

Kokuryo (2013) identifies visibility and connectivity as drivers that could enable information
technology to drastically change business models. This thesis combines and treats them as
traceability. In line with this thesis perspective, it is clear that the important intermediary fortraceability to transform business models is the most significant bottleneck created by the mass
production/mass selling business model that developed in the 20th century: the lack of visibility
and connectivity—in other words, the lack of traceability.
3.1.

The Bottleneck of (In)visibility Created by the Mass Production/Mass Sales Model

Based on historical records, Chandler (1977) suggests that products in bulk could be sold reliably
when, in the process of modern management entities creation, the railroad and the telegraph madeit possible to sell products over a wide area. This allowed to invest in large-scale equipment moreeasily, and accelerated the birth of today's big businesses. It was the arrival of the massconsumption society. The impact brought about through economic expansion under this model
was massive—even in Japan where it played a major role in increasing per-capita income from

97,000 yen in the 1955 fiscal year, to 3.968 million yen in the 1995 fiscal year (Cabinet Office,2011).
In the conceptual pattern of this thesis, the railroad and the telegraph eliminated a bottleneck(i.e., narrow business areas). This process can be said to have opened the possibility of mass
production initiated during the Second Industrial Revolution. The impact was so massive that itprofoundly changed social structures.
Although the mass consumption society model of mass production and sales created huge value,
its tremendous impact also created another significant bottleneck, that is, invisibility (Kokuryo,2013)—or in the context of this thesis, the lack of traceability. Specifically, prior to the expansionof business areas, manufacturers and consumers tended to be physically close. This implied that
producers had an understanding of who was buying their products and where. Symmetrically,
consumers knew the origin of the products. This relationship is lost when mass transport makes
it possible to ship products over long distances. A similar phenomenon relates to stores. Oncecustomers are able to visit from afar by railroad or automobile, the relationship between store andcustomer grows weaker.
Another example of this invisible relationship concerns business conditions in a supermarket,
where customers select products from a huge selection stocked in aisles, place their products in abasket, pay without stating their names to anyone, and then disappear. This means that the seller
does not know when and how buyers use their products. Conversely, even in this kind of
relationship without any traceability, the entire system has been created in order to maketransactions possible.
3.2.

Traceability/Bottlenecks and theownership transfer Model

The lack of traceability creates two social issues: it destroys continuous relationships between
sellers and users, and it makes it difficult to establish trust. This foundation was lost for customers
who trusted a product provider because they knew the producer or seller well. Without trust, it
can be difficult to transact.
Many innovations have been created in order to overcome this bottleneck and reap the benefitsof selling in wide area. For example, one sales technique which is taken for granted today is to
package a certain amount of products together, choose a brand name, and then advertise theproduct over mass media. This technique was developed in order to enable sellers to sell products
over a wide area, and to eliminate the trust gap created due to the distance with consumers. Insteadof trusting people (producers or sellers), consumers began to gain a sense of affinity and trust forcompanies by watching their commercials on TV.
Another method developed to build trust is theownership transfer model, in which all productdisposal rights (ownership rights) are transferred to the purchaser, and the entire value of theproduct is paid at once in cash or the like. If a shop and a purchaser are able to establish acontinuous relationship, other purchasing options (such as sale on credit) could become available.
However, this model is the safest in situations where the purchaser and her/his whereabouts are
unknown. It is true that expensive products could also be sold in installments after the customer's
identity or credit is established, or purchased on credit using an external mechanism such as acredit card. However, these selling methods are expensive for the seller and have a limited scopeof use. It could be argued that this model of making economic transactions through exchanging
ownership rights and cash is the most characteristic method of the modern market economy. For
this reason, it can also be acknowledged as a symbol of an open society where anyone canparticipate in social activities regardless of her/his origins.
3.3.

The Arrival of the Non- ownership transfer Business Model

Although the ownership transfer model has had a massive presence until now, its characteristicbottleneck of low traceability has created a range of problems.
The foremost example in the context of this thesis is the effect this bottleneck has had on
curtailing the operating ratio for products. For example, Mizuho Bank (2016) estimates that “theoperating time per day for an automobile in Japan is 28 to 37 minutes.” In other words, theoperating ratio is just slightly above 2%. Although shared use would have helped solve this, low
traceability until now has meant that, under the use rights sales model, rental vehicles have notbeen efficiently allocated because consumers cannot make use of the services unless they go outof their way to get to rental shops. This has created a strong tendency among consumers to feelthat they cannot use these services when they actually need them, limiting utilization. Further,individuals have been unable to loan out their own vehicles, as most insurances do not assume
this type of business arrangement if an accident occurs.
On the other hand, in the content industry, the difficulty of billing has become a major issue. The
ownership transfer model (in which all disposal rights are sold and transferred) is essentially
unsuitable in the music and movie industries, where it is easy for individuals to copy contents.
The official stance therefore has been that, when a CD or DVD is sold, the only ownership rightthat is transferred is for the medium (a plastic disc), while only use rights (with duplication
restrictions) are transferred for the actual content recorded on the medium. This business model
has been handled through strengthening legal protections. However, without any traceability, it isdifficult to stop the duplication of diffuse contents, generating concerns over piracy and the like.
This issue has become even more serious with the introduction of digital content, which does notdeteriorate when duplicated.
In contrast with this, an example worth mentioning is about online karaoke, which wasintroduced in 1991 (All-Japan Karaoke Industrialist Association, 2016). The industry in this caseutilized online technologies to keep track of song usage and to build a framework for distributing
payments collected from room fees and the like based on how often songs are played (JapaneseSociety for Rights of Authors, Composers and Publishers, 2017). This is a typical example ofutilizing network communication to establish traceability in order to diverge from a businessmodel dependent on hardware ownership rights sales, and to develop a business model based on
frequency of use.
The number of business models that use network communication and that do not rely onownership rights sales will continue to increase. According to the interesting literature survey by
Burkhart et al. (2011), although the concept of business model can be first traced back to the1950s, it began being suddenly covered around 1995. This can be thought of as a process where
improved traceability had the effect of forming business models that were simply not
implementable when the ownership transfer model was the only choice. Another effect was theapplication of such models to other industries, which led them to become the subjects of researchand implementation.
The Evolution of Traceability

4.

This section examines technologies to establish traceability. As it will be shown shortly,
traceability is not a single technology, but rather the result of the combination of multiple
technologies. Further, it is not something that is either there or not there; rather, it is somethingthat develops gradually, where the ability to trace people and things increases as technology
evolves. Finally, the scope of traceability tends to grow gradually—for example, the location
might define whether traceability can or cannot be ensured. It is clear that the usage licensebusiness model has also expanded gradually together with the gradual development of technology.
4.1.

Traceability

Although the literature on traceability in the information systems field can be retrieved back to
the 1990s, its amount increased rapidly during the mid-2000s in the context of RFID (radio
frequency identifier: digital tag) utilization (Moe, 1998). Much of this literature regards foodsafety, and involves efforts to utilize traceability quickly to trace food distribution, prevent
accidents, and recover products when problems have occurred, as concerns over food safety havegrown due to illnesses such as foot-and-mouth disease and bovine spongiform encephalopathy(Regattieri et al., 2007). The literature categorizes traceability into two forms—trace forward(understand where products go after shipping) and trace back (trace the route a product took after
being delivered)—and involves attempts to use RFID and database technology to establish
traceability. Although the use of RFID was initially limited to food distribution, the technology

can now be used in a wide range of fields, including logistics and facility room entry/exit
management.
These existing concepts of traceability focus more on products while emphasizing the tracing ofproduct whereabouts. Therefore, traceability has often been defined accordingly. In contrast,
traceability began being considered from the perspective of rights holders and administrators in
the content industry. With increasing amounts of digital content, it is becoming difficult to verify
content rights due to duplication. In order for the content industry to verify that users accessing
content have paid for it and have legitimate use rights, efforts have continued to make progress intracing content distribution and verifying the identity of users (Zhao and Zhang, 2012). This
perspective allows a clearer analysis of business models. Therefore, this thesis defines traceability
as “a state where the principle owner of property rights or product liability for some physical or
intellectual property is able to continuously confirm the state of the property and who is using it,”and focuses on those with rights and responsibility.
One very interesting point in the context of the relationship between technology and social needs
is how two-dimensional barcodes—which were thought to be old fashioned and eventually to be
replaced by RFID—have seen new use in fields such as logistics and payment due to their easeof use and how readily available scanners (including smartphones) are. In this respect, one
relevant business undergoing rapid growth in China is bicycle sharing, in which only use rights
for products (bicycles) are sold. Users pay by using their smartphones to scan QR codes attached
to bicycles. This is a perfect example of demand resulting in the repurposing of an existing
technology in order to eliminate a bottleneck.
4.2.

Traceability Technology

Although the method for selecting actual technologies varies depending on the nature of theasset, this section presents a summary of what kinds of technologies are necessary to establish
traceability on a slightly abstract level, and what technologies are being used to do so.
4.2.1.

Identification, Qualification, and Authentication Confirmation Technologies

A major premise for tracing objects and people is that the subjects being tracked and granted
usage must be uniquely identified. Additionally, when a customer attempts to use a product, it
must be confirmed that she/he has qualifications to do so. It must also be possible to confirm thatthe subject being traced is legitimated to use the product.
Identification is generally performed using some methods to scan an ID (identifier) that has been
assigned. In supply chain management, product codes (such as Universal Product Codes) thatwere developed during the barcode era are evolving into EPCs (Electronic Product Codes) thatcarry more information and are compatible with RFIDs and the like. While companies generallyassign their own unique product serial numbers, logistics operators tend to assign package
numbers for logistics use. True traceability is established when these many IDs are associatedtogether (for example, a system that can confirm that product number x is located in package
number x). In the digital content industry, links on the Web called permalinks are used to assign
identifying codes to digital editions.
Further, associating products IDs with user IDs is an important requirement in the context of
the usage license sales business model discussed in this thesis. In other words, a certain productmust be associated with a certain user ID when that user begins using the product, and then theassociation must be canceled when the user has finished. Although it was possible to make such
associations prior to the development of mobile devices, this was limited in scope to inside vendor
sites, and these constraints served to narrow the scope of sharing economies.
Determining whether an individual is qualified to use a product is mostly done through payment
systems. Some common examples include systems to prove that payment has already been made,or systems to confirm that a credit card company has approved someone's credit. One example
from the public sector would be a system used to prove someone's existence and age (such as acertificate of residence).
Confirming authenticity is crucial in preventing identity fraud. When confirming someone's
identity using a password or the like, or when a higher level of security is required, a typicalmethod is to store a digital certificate in an IC card and to deliver a key to the user who will proveher/his legitimacy—such as in the Conditional Access System (CAS) for digital TV. Cookies aresent to clients to keep users logged into websites (i.e., authenticate them). These may serve as
another method to prove authenticity.
4.2.2.

Sensors & Control Networks

In order to trace moving products, it is crucial to have sensor and control network functionalitythat tracks the state of products after they have been moved, sends information to rights holders,
and—if needed—unlocks products and performs other remote operations.
A typical example of sensor would be a reader capable of scanning barcodes, RFIDs, or IC cards
that contain IDs (as mentioned in the previous section). As image recognition technology
continues to evolve, biometric authentication using fingerprints or veins is becoming more
popular as a method to identify users. Another example is facial authentication, which uses
standard cameras.
Advanced control methods are also being implemented. Some examples include methods wherea shared product contains communication functionality that allows it to be unlocked remotely, or
methods that send an unlock code to users. Using a fixed code tends to result in license violationsin the latter method. As shown by software licenses of the past and today's bicycle sharing systems,having products online is a requirement for establishing a true sharing economy—which is why
expectations are growing for IoT to realize this functionality.
Networks have developed since the appearance of the Internet. Societies all over the worldcontinue to come closer to reach a state where wireless communication technology can be used
to ensure inexpensive Internet access—anywhere, and at any time. Nowadays, the Internet ofThings (IoT) is a topic of much speculation, as the society imagines a future in which everythingis connected. Connecting everyone through wireless devices will make it possible to understandwhen and where products are shipped—and by whom they are being used. This will free society
from the bottlenecks created by the ownership transfer business model, and expand the range offields in which the right of use licensing business model can be applied.
Evolution of the Sharing Business Model

5.

This section examines what kinds of sharing economies have evolved through the eliminationof bottlenecks by technology. Here, sharing economies are defined as “societies in which havespread a business model in which information technology enables multiple users to use the sameassets.” Although this definition is slightly different from the more general one, using it shouldmake it easier to understand the processes involved. More explanation will be provided in thenext section.
5.1.

Effective Utilization of Assets via Computerization“Sharing economy” has not a consolidated definition (Oh and Moon, 2016). Although theconcept has expanded in recent years in the wake of Airbnb, Uber, and other services that act asintermediaries when consumers loan their own assets, services that have existed for a long time—such as rental services—could be included in the sharing economies. In terms of social theory,
many see this as a revival of the concept of common ownership (as opposed to modern private
ownership) from collective societies. This could also concern online societies that have existed
since Linux was a public space. Heylighen (2017) highlights major trends that include sharing
economies in environments capable of quickly matching supply and demand at a micro level
following the evolution of underlying computerization, and suggests a transformation of theexchange economy based on money. Focusing on consumption, Botsman (2010) refers to thismajor trend as “collective consumption.”On the other hand, Habibi et al. (2017) argue that ownership of shared products has notdisappeared, and that, because online systems and the like are accelerating usage only, the conceptof ownership itself has neither disappeared (not exclusive possession) nor is being transformed
into sharing. Therefore, the common points of sharing that are actually making progress are“pooled resources” and “the use of online platforms to arrange payments.”

Price Water House (2015) takes a more business perspective, stating that, “sharing economies
allow individuals and groups to make money from underused assets. In this way, physical assets
are shared as services.” According to this definition, it will naturally become possible to apply
the concept of sharing to services for consumers and businesses alike. Although this literature
focuses on services for consumers, it also introduces some interviews with companies that are
conducting business while using an EMS (i.e., an outsourced production vendor). This way of
thinking enables a more direct view of the relationship between technology and business models,
which is why it is adopted in this thesis. The discussion will continue using the definition of,“societies which have spread a business model in which information technology enables multiple
users to use the same assets.”
5.2.

Expansion of the Sharing Model Following Advances in Technology

Having established a conceptual framework for the relationship between traceability and sharing
economies, this section analyzes several important past developments.
5.2.1.

Barcodes and the Expansion of the Sharing Model in Supply Chains

The impact of barcodes cannot be overlooked while considering the relationship between
technology, traceability, and business models. Barcodes were patented by Norman Woodland etal. in 1949, and were first applied on a trial basis in the railroad industry. IBM then combined thetechnology with a distribution code system in 1971. Since then, the technology has supported
supply chains and brought about major transformations (Scanlon, 2003; AINIX Corporation,2017). The technology has helped to advance visibility throughout the entire supply chain. One
typical example is the point of sale (POS) system, which combines a barcode reader with a cash
register. First introduced in Japan by 7-Eleven in 1984, these systems quickly spread throughout
Japan, providing retail chains and the like with detailed information on high selling products. It
could be argued that these systems played a decisive role in establishing today's distribution
business model.
More importantly for this thesis, barcodes have been adopted as crucial technologies to realize
shared use in a variety of fields, including logistics and distribution systems. Underlying thisdevelopment were increasing requirements for environmental measures—and, at the same time,the increasing need to ship multiple products at varying frequencies. In order to resolve thiscontradiction, there was increasing and expanding demand for multiple companies needing toload packages mixed on trucks.
This type of cooperative distribution naturally requires the strict management of products fromvarious companies loaded on the same truck. The issue is how to accomplish this. Upstream(where lots are larger), it is possible to manage products using paper slips when multiple

companies are using the same truck together. However, as shipment frequency gradually increases,
we get closer to the downstream part of the process, where package units are smaller andmanagement costs increase. This requires a system in which barcodes for each destination are
attached to products shipped out from the factory, and which is capable of streamlining
distribution center work and confirming (tracing) product passage through each logistic stage (Fig.
3).
The example of one specific method follows. At the factory shipment stage, when everything
up to the store is specified, products are shipped from the factory to the distribution center(assuming that products will be temporarily stocked there). The distribution center then sorts
products by store (i.e., picking) and delivers them accordingly. During each stage of this type of
shipment, products are inspected upon receipt as barcodes are scanned so that sales can berecorded. This is crucial to establish cooperative distribution. Here, barcodes serve as an enabling
technology to eliminate bottlenecks and make it possible to share logistics systems. This has also
led to the simultaneous development of logistics service outsourcing (i.e., third party logistics).

5.2.2.

The Sudden Rise of Mobile Devices and Sharing Services for Consumers

For a long time, barcodes had served their final main purpose with the development of POS
systems (i.e., cash registers in stores). Accordingly, the majority of sharing systems using
barcodes tended to be limited to vendor operations. Even when consumers were involved, user
identification and qualification/authenticity confirmation had to be performed at the vendor’s
physical site.

This situation is undergoing major transformations due to the spread of mobile devices likesmartphones. Mobile devices have had the effect of rapidly bringing sensor networks into
consumers' lives. Smartphones are also capable of identification and qualification/authenticity
confirmation. What is lacking is a system to lock and unlock products and perform remote control.
If these functions could be installed on the products themselves, it would be possible to provide
products as sharing services without locational constraints. Further, if control rights could be
granted to consumers, it would also be possible for consumers to share.
Removing locational constraints will serve as a major factor behind mobile technology greatly
extending the sharing economy business model. When products and users can be associated, users
identified, and qualification/authenticity confirmed anywhere, a new range of services will
become available. For example, a user could use her/his smartphone to unlock a bicycle, or toleave it on the street when she/he is not needed anymore.
Many articles have been published on the sudden rise of Internet-enabled services such as
Airbnb and Uber. Although the topic is not central to this thesis, it is particularly worth notingthat these services use systems in which users review one another to resolve the constraint of trustthat is a bottleneck impeding sharing. Along with the diffusion of sharing models that leverage
the trust accumulated in payment platforms making rapid progress in China, major bottlenecks
are being gradually eliminated.
In the digital content field, the diffusion of fixed monthly fee models that use mobile devices
is one form of sharing. Music has been sold for some time now in the form of audio sources andlicenses downloadable on a computer or other devices. However, factors such as the spread ofpiracy have led to growing concerns. In response, services that provide music libraries to traceable
devices are constructing business models in which users dispose of an environment in which theycan enjoy music whenever they like, while the revenue is distributed to rights holders according
to use. It is clear that this model will free the market from a pseudo- ownership transfer model
involving tangible items such as paper or plastic discs, and accelerate the transformation to amodel where music is shared as an asset among many people.
6.

What Lies Ahead

It has been argued in the past that traceability would serve as a mechanism to expand sharing
economies. However, it could be claimed that traceability is just starting to expand. Further, as
traceability develops, possible social issues could serve as new bottlenecks, as exemplified byprivacy issues. To conclude this thesis, I now provide a simple examination of possibilities andissues to be considered for the future.
6.1.

The Expanding Scope of Traceability via IoT

IoT is expected to increase traceability in all aspects of economic societies. Provided that theanalysis presented in this thesis is accurate, this is also likely to expand sharing economies. A
major transformation from the ownership transfer model that was established in the 19th century
and prospered during the 20th century is likely to bring about other drastic transformations in how
business is done. Moreover, marketing and management methods (including accounting)developed over the last century within the ownership transfer model will likely undergo massive
transformations to suit new business conditions. All these changes represent an endless source for
future research.
6.2.

Big Data and Knowledge Traceability

Although the situation is expected to greatly advance, it is important to realize that there are still
many fields in which there is not yet any expectation of ensuring traceability. One important field
is data traceability. For example, there has recently been much research on the use of artificial
intelligence to conduct big data analysis on user purchase histories stored in the cloud, in order tocreate intellectual property of economic value (such as music). Although this intellectual property
was meant to be created from data submitted by each individual user, there is currently no way toidentify which data contributed to what economic value. Technically speaking, technologies suchas permalinks (in which fixed addresses are attached to each piece of content) or Rich Site
Summary (RSS) and Atom Syndication Format (which are used to distribute content on blogs andthe like) are now being used in fields such as web marketing to trace the effectiveness ofadvertising, pay customer introduction commissions, and so on. However, it is undeniable thattrue knowledge sharing economies cannot be formed yet. Lyytinen et al. (2016) raise spatiotemporal traceability of knowledge as one of the five factors behind the four processes by which
digital transformation creates innovation, and predict a future breakthrough.
6.3.

Toward Resolving Privacy Issues

Curtailing privacy while realizing the benefits of traceability has been a persistent issue in thisfield, and it will continue to be so in the future. The issue until now has involved mostly large
vendors gaining a detailed understanding of the conditions of individuals. However, assumingthat sharing between individuals (for example, loaning a private automobile) expands and there
are more opportunities for owners to track users, it is easy to imagine that we will face issues ofan entirely different nature than those seen before.
The discussion will likely shift to knowledge traceability, in which the status of information
distribution and access is understood and managed appropriately. On the other hand, it will benecessary to trace and record the access to information flows in order to allow only those withright. Technological development will likely focus on solving this paradox.

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