Unstable platforms: Uber’s business model and the challenge of organisational legitimacy

Abstract

ABSTRACT Lauded as the poster child of the sharing economy, the success of Uber’s business model was once viewed as inexorable. However, a disastrous Initial Public Offering and a series of legal rulings since have led some to question whether it has a viable model at all. This changing sentiment raises important questions about how we define a business model and understand the determinants of its success and failure. Rejecting the dominant diagnostic approach, this paper synthesises critical accounting work on business models as narratives with Suchman’s concept of organisational legitimacy. We argue that business models are narratives articulated by firms in order to achieve both pragmatic and moral legitimacy. In contexts where stakeholder interests diverge, this requires careful framing in order to foreground certain economic and moral representations whilst omitting others. Business model narratives are consequently partial, unstable and open to contestation. Applying this formulation to Uber, we argue that its pragmatic legitimacy was contingent upon a particular set of conjunctural conditions and the undisclosed exploitation of legal grey areas in order to grow at scale. We highlight the tensions that emerge when those undisclosed practices become a focal point for social mobilisation and understand Uber's recent problems as emerging from external challenges to the moral legitimacy of its business model narrative. The paper contributes to accounting research on business models and legitimacy and presents a revisionist account which positions platforms as fragile economic and moral entities dependent on conjunctural institutional and capital market arrangements, rather than heroic technological disruptors.