Your Uber is arriving now: An analysis of platform location decisions through an institutional lens

Abstract

The disruptive impact of platform businesses on local economies has received much attention, but virtually none has been paid to the factors that impact platforms’ decisions about where to locate their activities. The novel, disruptive nature of platforms limits the relevance of traditional theories about location decisions. We argue that local institutional conditions and global legitimacy spillover affect the choices of platform businesses about where to operate. We analyze the controversial case of ride-hailing platform Uber, an app-based service that matches uncertified chauffeurs with passengers. We find that Uber showed a preference for cities that promote competition and innovation. A spillover analysis shows how Uber leveraged their global pool of customers by choosing cities whose visitors were already familiar with Uber’s service. Our study illuminates the key role played by the brand’s mobile customer base as global carriers of legitimacy for Uber’s controversial innovation.

Themed issue: Methodological pluralism and innovation to advance strategic organization research in organizations and fields

“…With a pluralism of theoretical lenses and methodologies we can examine known phenomena using new perspectives as Punt et al (2023) do to show the role of informal institutions on the location decision of Uber. Pluralism also allows us merge existing phenomena and perspectives in creative ways.…”

“…Three articles in this issue explore field dynamics and how they shape outcomes in fields, contributing to work at the intersection of institutional theory and strategy. Punt et al (2023) use an institutional theory lens and event history analysis to look at the location decisions of platform companies, which are ‘born global’ and have the ability to expand to a multiplicity of locations within a short period of time. By looking at the role of informal institutions, this piece complements prior research, which predicts that traditional multi-national corporations will locate in new locations that are institutionally similar to their home location, in terms of formal economic and political institutions.…”

Beyond National Reach?

“…Given that institutional change is a slow, gradual process (Mahoney & Thelen, 2009;Thelen, 2009), the results obtained are hardly biased by possible differences between years. For social dialogue effectiveness, we used the IPD database (Gracia & Nedjam, 2018), which includes perception data on 127 indicators of institutional characteristics for countries and has been widely used in institutional economics (Bénassy-Quéré et al, 2007;Punt et al, 2021). This variable ranges from 0, indicating very little social dialogue at the national level, to 1, indicating a highly effective national social dialogue.…”

“…Until now, institutionalist scholars of the gig economy have focused on its on-site, geographically bounded parts (Koutsimpogiorgos et al, 2020;Punt et al, 2021;Seidl, 2022;Thelen, 2018). However, the increasingly international dimension of online platforms, especially when transacting digital services, is underexplored.…”

National Institutions and Platform Evolution in the European Gig Economy

“…Using the ride-hailing platform Uber as my case study, I examine how institutional actors (including unions and regulators) in different countries reacted to Uber's controversial service with unlicensed drivers. I do so by composing a novel dataset on institutional reactions to Uber's entry across all 76 countries where Uber had entered up until 2017, with entries dates taken from Punt et al (2021). Using the number of those reactions that had a negative effect on Uber's business model as my dependent variable, I examine its relation to three types of institutions: namely the rule of law, institutions supporting innovation, and labour market institutions.…”