Does Uber Redefine the Firm? The Postindustrial Corporation and Advanced Information Technology

78 Pages Posted: 19 Apr 2016 Last revised: 13 Jun 2017

See all articles by Julia Tomassetti

Julia Tomassetti

Center for Law, Society, & Culture, Indiana University Maurer School of Law, Bloomington; City University of Hong Kong School of Law

Date Written: July 20, 2016

Abstract

The popular on-demand ride service Uber has become the exemplar of the platform economy and inspired a new narrative about advanced information and communication technologies (ICTs) and the firm. The narrative tells us that Uber facilitates a market between independent businesses and buyers by administering technology that lowers the costs of exchange. Despite borrowing the language of Coasian firm theory, however, the Uber narrative is largely nonsensical within it: Uber appears much more like a seller of transportation services than a market intermediary within a Coasian analysis. By examining disputes over whether drivers for Uber and its competitor Lyft are employees or independent contractors, the Article shows that the Uber narrative reveals not technology’s dissolution of the firm, but rather a disjuncture between the firm and its corporate form. While often belied in practice, major theories of the firm, like that developed by Ronald Coase, assumed the corporation would be a servant to productive enterprise. The emergence of the postindustrial corporation that pursues profit by other means, including speculative activity and regulatory arbitrage, poses another challenge to this ideal. The Uber narrative both obscures and legitimates a weakening nexus between the firm and corporation. The Article hypothesizes several reasons for the Uber narrative’s appeal, despite its illegibility within Coasian theories of the firm, to which judges often appear committed in disputes not involving platform companies. First, the narrative has political valence—it suggests technology renders the firm obsolete, liberating individual producers. Second, the narrative conceals the incongruence between Uber’s corporate identity and organization of productive activity by appealing to the cultural exceptionalism of ICTs and discourses that associate algorithmic programming with the inscrutability of the market. Third, the narrative’s appeal reflects the challenge of theorizing service work under an enduring industrial paradigm. Finally, ICTs disrupt assumptions in Coasian theory about the association of firm and market production with the legal relations of property and contract. ICTs lowered the costs of centralized coordination, or firm production, in part by enabling Uber to control production inputs without acquiring property rights over them.

Keywords: Uber, gig economy, firm theory, information and communication technology, employment and labor law

JEL Classification: D23, L2, M55

Suggested Citation

Tomassetti, Julia, Does Uber Redefine the Firm? The Postindustrial Corporation and Advanced Information Technology (July 20, 2016). Julia Tomassetti, Does Uber Redefine the Firm? The Postindustrial Corporation and Advanced Information Technology, 34 Hofstra Lab. & Emp. L.J. 1 (2016); Indiana Legal Studies Research Paper No. 345. Available at SSRN: https://ssrn.com/abstract=2763797

Julia Tomassetti (Contact Author)

Center for Law, Society, & Culture, Indiana University Maurer School of Law, Bloomington ( email )

211 S. Indiana Avenue
Bloomington, IN 47405
United States

City University of Hong Kong School of Law ( email )

6/F, Lee Shau Kee Building
Kowloon, Shatin, New Territories
Hong Kong

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