Coworking spaces and resource sharing: a strategic perspective

Coworking is a phenomenon!

Since its advent in 2009, the coworking space industry has grown almost 26% per year, on average, and is responsible for 78.6 million square feet of office space across 54 major metropolitan areas in the world. According to the New York Times, in the US over half a million people worked from coworking spaces in 2018, and that number is expected to double by 2022. In Hong Kong, even amidst the increasing numbers of people working from home due to COVID-19, coworking providers are thriving unlike other parts of the economy.

At the same time, investors and the public have questioned the sustainability of the coworking business model. In the most prominent setback for the sector to-date, WeWork, one of the world's largest coworking space providers, had to delay its IPO in September 2019 due to financial insecurity and lack of a sustainable business model. The organisational phenomenon in the coworking setting provides a new context to study how work is done in and between firms. To date, this phenomenon is yet to be explored in depth, with scant research focused on understanding the organisational processes in this novel context.

Based on my research spanning over two years at eight coworking spaces in the United States, France, Portugal, Hong Kong, and Seoul, I find that resource sharing is a major motivation. In this article, I outline the types of resource sharing that coworking spaces allow – physical resources, human resources, and emotional resources. In addition, I identify the outcomes of this sharing – collaboration and community building – to understand why entrepreneurs may choose coworking spaces to meet their strategic needs.

Coworking enables resource sharing!

Coworking involves a diverse group of people who either work for companies or as freelancers alongside one other, sharing the working space and resources. These characteristics of coworking spaces are particularly relevant for entrepreneurial companies, many of which are lone entities that may need strategic partners to fill resource voids. Nascent companies, in particular, lack the resources needed to start and grow their businesses. Many entrepreneurial firms hence choose to start their ventures in coworking spaces instead of leasing out expensive office spaces of their own. So, what kinds of resources are shared?

Physical resources

The most obvious benefit of being embedded in a coworking space is that you have full access to the facilities that the space provides including both designated and first-come-first-served office desks, meeting rooms, lounges, cafes, printing facilities, phone booths, and auditoriums or large meeting spaces. The access to these kinds of physical resources may be the biggest motivation for companies to use a coworking space instead of leasing out a regular office. One of the interviewees for my research noted that they benefit hugely from having access to these resources.

"The equipment and facilities that coworking spaces provide are state-of-the-art, expensive models that we probably can't afford since we're just a startup." – Early-stage entrepreneur, New York

In addition, coworking spaces often use designers to professionally decorate their venues into beautiful and appealing locations that people can enjoy. Many users commented that they draw enormous benefit when they meet their clients or external partners.

"Being located in a coworking space, especially ones that have a brand name, helps us to make a good impression when we meet our clients. They actually want to come here and have a meeting because it's decorated nicely and has free coffee and sometimes even beer. We also attract a lot more applicants when we're recruiting. Young people like to work in these locations. It matters to them." – CEO of startup, Seoul

Human resources

Another type of resource sharing is the exchange of people. Early stage startups and freelancers cohabit these spaces, providing an opportunity to share expertise more readily. For instance, if a startup in its very early stage has no marketing or HR representative in-house, they can reach out to the coworking community to ask for a specialist to work on a temporary basis for a project. There may be a freelancer or specialist in another startup that can help with the task. This is often a complicated process if you are not part of a coworking community, requiring companies to hire someone from scratch.

"Sometimes we need legal advice. But we really lack resources to hire a lawyer on our own because they cost a lot. Same for accountants. This is a concern for many startups." – Entrepreneur, Hong Kong

To help with these needs, some venues provide legal counseling sessions and invite external lawyers and accountants to provide assistance to their members. These resource sharing possibilities enable the flow of people within and external to the coworking space.

Emotional resources

One of the most excruciating parts of the entrepreneurial journey is managing the uncertainty. Many startups actually fail during their initial three years. During this time, founders go through multiple rides on an emotional rollercoaster and could give up and lose hope. The coworking community provides emotional support by being there to share these "entrepreneurial emotions" and provide the possibility of learning from one another's experiences. Such sharing allows budding entrepreneurs to find consolation in the experience of other companies going through similar phases of uncertainty and doubt. In addition, close-up observation can be motivating, especially watching companies that are successful. This may inspire entrepreneurs to move forward even in the face of uncertainty. These emotional resources are crucial for the growth of startups, and coworking spaces provide a landscape where it is possible to share the emotional journey. Many startups noted that this is actually the most important and beneficial resource sharing that they have experienced.

"We sometimes feel burnt out. Or it seems like we'll never make it. But then, we see another company right next door celebrating their first round of funding. We've seen their ups and downs because they are right next to us. It gives us a glimmer of hope that one day, we'll be able to celebrate our success." – CEO of startup, France

Sharing resources results in better collaboration and community building!

So, what happens when entrepreneurial firms share resources? One of the most notable outcomes is collaboration. This can come in many different forms, from doing a project together, holding an event, or even creating a product. Collaboration is heightened by the frequent interactions of the members and this leads to opportunities to work together. For instance, interactions in elevators could spark conversations and easily pave the way for work-related information sharing. Resulting from such interactions, meetings could be set up to discuss whether ideas have potential for a real project. These unintended ideation sessions often turn into projects that two or more companies can benefit from. Indeed, many coworking spaces have lounge areas or coffee stations to encourage these "unintended" interactions and the flow of conversation between members.

Another outcome of resource sharing is community building. Communities are built upon shared values and norms. Many coworking spaces embrace a distinctive culture, and members share their values and norms, building up a sense of community in the process. For example, Impact Hub is a global coworking community that unites people with a common purpose of social impact. The members in this community share similar goals and strive to create and build entrepreneurial companies that make the world a better place in both environmental and social aspects. Because members share various resources with each other, they build a common sense around goals, allowing for a cohesive community to emerge and develop over time. Another example is Chisel, which is a coworking space for lawyers. By limiting coworking to a distinct field and occupation, they can foster a sense of community around a more focused group of people that have similar goals and can share relevant information with each other. The community building component of coworking helps to enhance the unity of its members whilst distinct sets of norms and values differentiate such venues from one another.

Coworking in the pandemic?

In light of the current global crisis due to COVID-19, many people are currently working from home, and it's unclear when they will return to their offices or coworking spaces, many of which have been temporarily closed. Recently, the media has been reporting many headlines such as "The death of the office," or "Work-from-home FOREVER," and it highlights the fact that our traditional office culture is changing. What does this mean for the future?

Coworking spaces have come up with interim solutions. For example, Cove, a US-based coworking company recently launched cove@Home, which is a service that offers a virtual community, tips for setting up a home workspace, and even home deliveries of coffee and food. WeWork in Hong Kong has reorganised venues so that the seats are further apart than before, put signs up to ask members to participate in social distancing, provided wipes and hand sanitiser to its members, and arranged for more frequent cleaning. This would be similar in other coworking communities around the world.

In the long-term, if the work-from-home trend holds, it can actually pose an opportunity for coworking providers. Large companies that usually sign long-term leases for office buildings may transition into other options, and the quick and obvious choice would be to use coworking spaces. Many companies would be able to use these venues for meetings that require face-to-face interaction and allow their employees to work from home at other times. Instead of using the whole building as office space, a company may choose to rent out one floor, a significant cost saving. In general, coworking spaces provide flexible lease terms and could attract many people and companies preferring the flexibility. At the end of the day, these spaces will continue to thrive, even in the midst of the changing workplace.