Liminal movement by digital platform‐based sharing economy ventures: The case of Uber Technologies

Abstract

We explore the challenges that digital platform-based sharing economy ventures confront in establishing legitimacy for their business models by examining the dynamics that ensued when Uber Technologies deployed its ridesharing business model in four U.S. cities. Uber entered each city to jump-start network effects by establishing cognitive legitimacy while deepening a sociopolitical legitimacy crisis that emerged due to mismatches between its business model and existing regulations. Operating between existing categories, Uber used a series of interrelated market and nonmarket strategies, which we label as liminal movement, to generate cognitive and sociopolitical legitimacy.

Ecosystem Legitimacy Emergence: A Collective Action View

“…First, we provide an institutional view to understand how collective action reduces the liability of newness of emerging ecosystems. Building on a previous focus on the legitimation efforts of orchestrators Garud et al, 2020;Gawer & Phillips, 2013;Uzunca et al, 2018), we demonstrate how an analysis of ecosystem emergence and legitimation benefits from a collective, multiagent perspective, where different ecosystem participants have particular and mutually reinforcing roles.…”

“…This aligns with the insight of , who argue that the standards of legitimacy can shift as different criteria are applied in different situations. Similarly, Garud et al (2020) show that ecosystem orchestrators move between market and nonmarket strategies over time to generate legitimacy. To reveal these and other dynamics, the application of our model to different stages of an ecosystem life cycle as well as differing ecosystem challenges will need to be confirmed and elaborated through future research.…”

“…A further set of external interventions is actions of regulators, such as investigation by competition authorities, the establishment of standards, and even the passing of statutes that relate to the ecosystem (Ozcan & Gurses, 2018;Uzunca et al, 2018). The introduction of such regulation can lead to altered participant relationships, changing power-relations and value-realization conditions and threats to established interdependencies (Garud et al, 2020;Holm, 1995).…”

“…User perceptions of the distinctiveness of an emerging ecosystem value proposition are also crucial to its success (Cennamo, 2020;Taeuscher, Bouncken, & Pesch, 2020). Similarly, external actors-such as regulators, competitors, media, and analysts-have a major role in facilitating ecosystem emergence and broader legitimacy construction (Ansari et al, 2016;Garud et al, 2020;Snihur et al, 2018).…”

“…Suchman (1995) also identifies pragmatic legitimacy as a further type of legitimacy, which arises from an organization's capacity to achieve practical outcomes in its immediate environment. However, due to its similarity to organizational learning and subsequent rejection by scholars (Suddaby et al, 2017), as well as its not being considered in extant ecosystem studies (see Garud et al, 2020;Gawer & Philips, 2013;Uzunca et al, 2018), we do not consider it here.…”