Institutional entrepreneurship in the platform economy

Abstract

Platform innovations like Uber and Airbnb allow peers to transact outside established market institutions. From an institutional perspective, platform companies follow a reverse innovation process compared to innovation within traditional regulatory systems: they first launch their online platform and ask for government permission only later. We analyze the emergence of Uber as an institutional entrepreneur in The Netherlands and the strategies it employed in a failed attempt to get its UberPop service legalized through changes in Dutch taxi law. We conclude that Uber's failure to change the Dutch taxi law stemmed from the difficulty to leverage pragmatic legitimacy among users into favorable regulatory changes in a highly institutionalized regime, because Uber's institutional work strategies were not aligned.