Disruptive entrepreneurship and dual purpose strategies: The case of uber

Abstract

Uber provides a two-sided platform that matches travelers with drivers who choose when, where, and how long to drive using their own vehicles. Uber disrupts local markets with an incumbent taxi industry, and the industry fights back in both its market and institutional environments. This paper focuses on Uber's strategy for addressing the challenges from the taxi industry with an emphasis on dual-purpose strategies that provide in a complementary manner benefits both in the marketplace and in the institutional environment. The focus is on three issues important to Uber's success. The first is whether Uber is a platform company or a transportation service that falls under the jurisdiction of local regulators. The second is whether Uber drivers are classified under the law as independent contractors or as employees. The third is passenger safety and the qualifications required for ride-hailing drivers. The corresponding dual-purpose strategies considered are market engagement, work enhancement, and accommodation. Implementing these dual-purpose strategies involves lobbying, stakeholder mobilization, and institutional venue shifting. A model of a local transportation market is presented as a framework for analyzing market competition and for identifying the incentives of market and institutional participants, including Uber, its drivers and passengers, taxi companies and their drivers, and safety advocates, to challenge or support Uber and ride-hailing. The model distinguishes between full-time and part-time drivers, frequent and infrequent travelers, and whether taxi drivers or taxi companies own the taxi medallions.