Regulation, regulative legitimacy and legitimation of ride-sourcing platforms in Finland

Abstract

Since their inception ride-sourcing companies have disrupted the traditional taxi markets with their digital platforms and match-making algorithms. However in the previous hundred years the incumbent taxi companies had become protected by national legislation which aimed to maintain public order and safety. Despite the well-developed regulation on taxi market the legislation has not been clear whether ride-sourcing is legal or not. This is what the new players such as Uber have been exploiting with their aggressive expansion strategies when trying to win the race on network effects.

This thesis studies the regulative landscape of ride-sourcing phenomenon in Finland and the three law making processes in 2015–2020. It summarizes how the regulation changed from the ride-sourcing platform point of view and uncovers the legitimation strategies Uber used when establishing a subsidiary in Finland already before the first reform of the law on transportation in 2018. It matches the strategies to the ones previously identified in the literature and gives insight how disrupting technology company has tried to affect the law makers in order to create a legislation which would ultimately grant ride-sourcing regulative legitimacy.

The results of the study tell the story of how the closed taxi market in Finland has opened up to welcome ride-sourcing platforms after a few missteps. Second it demonstrates how the IT legitimacy taxonomy by Kaganer et al. (2010) can be used to understand the legitimation strategies of a private organization during a law making process in the hopes of establishing regulative legitimacy in the future. Finally it reveals that while the regulation has changed to more favourable for ride-sourcing, the battle is far from over and new disputes are looming around the corner.