The Institutional Context of International Management

Uber Technologies Inc., founded in San Francisco in 2009, provides a ride-hailing service where a passenger can hail a ride from private drivers who use their own vehicles. Since this taxi service is available through a mobile app, Uber was able to quickly expand its service internationally. As of December 31, 2023, Uber operates in approximately 70 countries, which account for about 77% of all trips [1]. However, the innovative business model of offering a taxi service without owning taxis and employing drivers is new to many countries, presenting significant challenges to Uber’s international operations. Uber’s annual report (2024) [1] outlines these challenges, including more restrictive laws and regulations governing competition, pricing, payment methods, Internet activities, transportation services (such as taxis and vehicles for hire), social security laws, employment and labor laws, and many more. Due to the regulatory issues arising from different institutional environments, Uber’s operations in many countries are indeed controversial. One primary reason behind this controversy is that many countries believe Uber’s business model disrupts their local taxi industry, which is highly regulated in terms of taxi supply and service quality. In many countries, taxi drivers need a professional license (medallion) and must belong to taxi companies to ensure quality service. Thus, these drivers are classified as workers or employees of taxi companies and are entitled to minimum wage and holiday pay. However, due to the nature of its business model, Uber drivers are classified as independent contractors, not employees, in many countries such as the United States and South Africa [2]. In contrast, Uber drivers are classified as employees in countries like France, the Netherlands, and the UK where Uber must provide benefits (e.g., minimum wage for all hours worked, rest breaks, and holiday pay) and protections (e.g., 12-hour driving limits) [3]. Consequently, Uber must remain vigilant about potential protests and work closely with local governments for legislation, as it directly affects Uber’s operations and revenues.