The social economy of coworking spaces: a focal point model of coordination

Abstract

Coworking spaces are a rapid growing feature of modern cities, and increasingly popular with freelancers, knowledge workers, start-up communities, and others engaged in non-standard creative urban work. Drawing on ethnographic data gathered in a large case study of coworking spaces in Australia, we develop an economic model of an important aspect of coworking spaces in which a coworking space is a Schelling point. This argues that the main margin of value a coworking space provides is not price competition with serviced offices, or a more pleasant environment than working at home, but as a focal (Schelling) point for finding people, ideas and other resources when you lack the information necessary for coordination. Drawing on ethnographic research, we test some specific predictions the model makes about the organizational and institutional form of successful coworking spaces.

Keywords:

• Coworking
• focal points
• ethnography
• coordination problems
• real estate business models

JEL:

• D02
• D83
• L85
• R3
• Z13

Notes

¹ Three exemplifying cases of these practices emerged concurrently in the mid 2000s ‘coworking’ in San Francisco, ‘jellies’ in New York City and ‘the hub’ (now ‘impact hub’) in London. These origin stories are elaborated in Waters-Lynch et al. (2016).

² These interviews were conducted in a qualitative ethnographic case study investigating the social learning practices of a group of coworkers from 2013 to 2016. The research methods included 50 interviews with coworkers and 3 years of weekly observation and participation in 4 early coworking sites in Melbourne.

³ Opposite pure coordination games, where the equilibrium strategy is to cooperate, are games of pure conflict, where the equilibrium strategy is to defect (Schelling 1960).

⁴ Focal points have been in particular applied to understand the emergence of property rights (Friedman 1994), law (McAdams 2000), and other social institutions, including the emergence of social order (Leeson et al. 2006), and the origin of national borders (Carter and Goemans 2011).