Uber Technologies Inc. is a private company that was started in the United States in 2009 by Garret Camp and Travis Kalanick. The company is a privately owned digital e-commerce service taxi company that is responsible for the Uber car transportation mobile apps. It is responsible for the development, marketing and operation of the transportation and food and delivery applications (Schneider, 2017). Its headquartered in San Francisco and was launched in 2011 after the initial tests on mobile app services. Currently, it is operational in over 633 countries across the globe. In employing innovation as a strategy, Uber Technologies was able to bypass the policies and regulations placed on physical taxi firms. Through its digital presence, it was able to bypass protectionism and implement market fundamentalism in its operations. The paper below seeks to analyze the impact of the two theories on Uber’s ability to innovate new products into the market.
Market fundamentalism is a concept that first evolved and was embraced in the 1970s as suggested by Karl Polanyi. It is a concept whereby people, businesses, or organizations believe that they can operate best without the government’s intervention. It is referred to as “free market fundamentalism.” In this market, the government is unable to do anything correctly leading to the development of business constraints for the organization present within the market. Free market fundamentalism emphasizes that the government is unable to regulate a markets activities and thus accredits the need of the market to be self-serving and regulating with no interference from the government. It was introduced as a strategy to oppose taxes, government measures and other regulations imposed by the government that consequently restricted some of the businesses activities. In Market fundamentalism, the market possesses all the knowledge and expertise it requires to develop technological innovations with little interference from the government (Bockman, 2014).
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Protectionism is the opposite of free-market fundamentalism. It is a theory which refers to the various actions imposed by the government on the market, such as government policies, restrictions, and regulations on imports. These laws placed to aid the state in international trade by protecting it global competitors (Schneider, 2017). These policies are typically placed to reduce the number of imports by increasing the prices of items being purchased from foreign countries (Schneider, 2017). In so doing, the government can protect the local market or domestic industries from other foreign competitors. Buyers within the country are forced to engage in local sourcing instead of relying on international sourcing. The state through implementation of protectionism can generate and uplift the current economy within the state. However, there are lower levels of innovation in this type of market as the country has little interaction with the global market (Schneider, 2017).
In the United States today, the current president seeks to employ protectionism policies. For the past decades, various transport or taxi firms have enjoyed the benefits of protectionism in the market (Schneider, 2017). The government has enabled the companies to operate under specific policies which consequently discourages other foreign competitors to enter the market. However, through innovation, Uber was able to bypass the regulations and policies imposed on the transport industry under protectionism policies (Schneider, 2017).
Uber has been operating on a digital platform which has allowed it to penetrate to a digital market. These markets are emerging and run on free-market fundamentalism as they are unopposed (Schneider, 2017). There is little government intervention. Its digitally placed operation is such that it is made in a loophole. No clear government policies are running on how to regulate businesses in digital platforms. In doing so, the local businesses suffer from competition arising from digitally placed business models (Schneider, 2017). The government is unable to regulate the activities of Uber as they have a digital presence and the policies existing are meant for a physical presence. Uber is mostly an application which offers communication between customers and licensed taxi operators. It cannot be treated as a physical taxi operating company (Schneider, 2017).
In conclusion, it is through the application of innovation that Uber has been able to operate in a laissez-faire market. Protectionism theories guarantee the implementation of government policies on existing business models physically placed on the market. However, Uber has come with a digitally set model that bypasses that of traditional taxi firms. In so doing, identifying a free market where it is the only party and is self-regulating.
References
Bockman, J. (2014). The Power of Market Fundamentalism: Karl Polanyi’s Critique. Thesis Eleven , 125 (1), 157–161. https://doi.org/10.1177/0725513614559938b
Schneider, H. (2017). Uber: Innovation in Society . Seattle, United States of America: Springer. Print.
