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Creative Destruction and the Sharing Economy

Uber as Disruptive Innovation

Henrique Schneider

While creative destruction and disruptive innovation change the entrepreneurial landscape; regulation – especially regulation of sectorial markets and competition regulation – can delay this change or even bring it to a halt. Uber plays an active role between these two forces: first as an agent of creative destruction and then possibly in championing regulation on its own terms. Grounded in a particular understanding of the economic concept of the market as a series of processes, this book explores the implications of creative destruction, competition regulation and the role that businesses play. Instead of discussing these relations in a purely abstract manner, this book uses Uber as a case study.
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Chapter 4: Are innovation and regulation opposites?

Henrique Schneider

Extract

Are innovation and regulation opposites? From a perspective that understands markets as open-ended, undeterminate processes, regulation is detrimental to innovation. Regulation presupposes a certain idea of the results of the markets. Often, this is not made explicit in the regulation itself, but being willing to make rules implies not being willing to accept any behavior or outcome. In this chapter it has also been explained how regulation serves the status quo in using the status quo to measure innovation. By necessity, innovation is different from the actual state of affairs, and, in as far as actual regulation is used to measure it, deviant. Actual regulation, by ‘correcting’ the deviances of innovation diminishes the innovative content or brings the whole process to a halt. So, in answering the leading question of the chapter, yes, innovation and regulation are opposites. Is Uber changing its business model because of regulation? Using the example of Uber it has been shown not only how the company adapts to regulation but in adapting to it, it changes its own business model and diversifies it into less regulated realms. Instead of advancing innovation in the markets it started to ‘disrupt’, Uber opts for complying and diminishes the development of new technology or products that were able to revolutionize these markets. Instead it expands to more generic, that is, less innovative products.

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