Disruptive Innovation- Impact of e-hailing ride services on the financial, health, mental wellbeing and social aspects of lives of Taxi Drivers in Kuala Lumpur

Running head: DISRUPTIVE INNOVATION
Disruptive Innovation- Impact of e-hailing ride services on the financial, health, mental well-
being and social aspects of lives of Taxi Drivers in Kuala Lumpur
Name of Student
Name of the University
Author Note

1
DISRUPTIVE INNOVATION
Literature Review
Innovation
The e-hailing ride services are considered as the processes which involve the ordering of
a vehicle such as taxi, car or others through a mobile device or a computer device (Ban,
Dessouky and Pang 2016). These kinds of services are getting extremely popular among the
customers as more and more people are aiming to board a ride electronically. The personal
transportation industry has witnessed enormous changes in the last few years which are due to a
disruptive innovation- application based car services (Ban, Dessouky and Pang 2016). For
hailing example, Uber has made sufficient structural changes in their systems so that the
customers need not be physically present while hiring a taxi. As opined by Rayle et al. (2014),
the advances in the information and technology have fostered new real time trips for the
customers. There have been increasing number of companies such as Sidecar, Uber, Lyft and
others. In this kind of technology, the passengers usually request rides from the vehicle through
mobile application, which is being driven by non-commercial drivers. In this process, the hailing
process of the customers is being done by GPS (Global Positioning System), which informs the
driver about the exact location of the passenger (Ban, Dessouky and Pang 2016). The e-hailing
ride services do charge distance variable fare in which almost 80% of the fare is being given to
the drivers and the rest of the amount is being given to the ride-sharing service. There has been
an increase in the services of the e-hailing services as far as drivers, customers and the various
geographical areas are concerned.
As argued by Lee (2017), the Malaysian parliament has passed bills which legalize the
process of e-hailing firms like Uber and Grab to expand in the country. The residents of

2
DISRUPTIVE INNOVATION
Singapore believe that e-hailing services are important way for reducing the traffic congestion of
the roads. There have been an increase in the integrated transport system and the urban
commuters benefit a lot from these services (Rosenblat and Stark 2016). These app based
services not only provide competitive fares but it also provides privacy and convenience to the
passengers.
The findings of Hong and Wong (2017) reveal that the transportation of Malaysia has
highly undergone changes in the last few years. There has been a significant increase in the
number of new vehicle registration from 2012 t0 2016 (Ban, Dessouky and Pang 2016). Since
there is a large number of urban transport as well as mobile vehicle availability, hence it is
important to develop a real-time monitoring system, which would be helpful in solving the issues
of traffic movement of the vehicles (Ban, Dessouky and Pang 2016).He and Shen (2015) argues
that there has been an increasing trend of modeling the taxi services with the various smartphone
services by using the various e-hailing applications (Rosenblat and Stark 2016). On the
traditional front, the customers have always hailed the traditional taxi services on streets, no
matter if they offered you low levels of comfort or low levels of efficiency. It is important to
create a spatial equilibrium in which the demand and the supply of taxi services are being
balanced (Hong and Wong 2017). There exists an equilibrium in which the customer demands
and the elastic taxi are being satisfied.
Schechtner and Hanson (2017) agree that there are three basic rules that have been used
in the traditional taxi industry. There is a moderate degree of quality control on the drivers and
vehicles, quality control on the taxis belonging to particular jurisdictions (Hong and Wong
2017). The quality of the e-hailing services depends on the safety and convenience of the riders
(Rosenblat and Stark 2016). These kinds of services have posed serious challenges for the

3
DISRUPTIVE INNOVATION
traditional taxis in terms of its comfort (Hong and Wong 2017). They are said to give more
comfort to the customers and there is also a subsequent reduction in the rent seeking behavior of
the customers (Schechtner and Hanson 2017). They are increasingly forcing the policymakers to
revisit the existing rules that are evident in the traditional taxi industry. Westervelt, Schank and
Huang (2017) agrees that app based services are said to have reduce the income of the cab
companies, taxi drivers and the taxi trips.
Impacts of innovation
As opined by Hamari, Sjöklint and Ukkonen (2016), the e-hailing services have both
positive and negative impacts on the people. It has benefitted all the three stakeholders namely
customers, drivers and industry. The customers do not need to run behind the taxis on road or
waiting for hours on a deserted road for a cab. The e-hail users are able to hail the car from any
location (Schechtner and Hanson 2017). They can get a car for them in no time. The driver and
the customer are able to see each other’s location and hence they can communicate with each
other easily. Greenblatt and Shaheen (2015) argued that the e-hail services have advantages for
the drivers too, who need not worry about the unpaid fares since the customers can pay them
later by online means. The e-vehicle drivers can get rid of the very expensive taxi rental by
getting their own vehicles (Schechtner and Hanson 2017). The drivers do not have the option of
favoritism as well as various office politics. In this system, the passengers are also being rated
and hence the rude, disruptive passengers are automatically being removed from the system
(Ban, Dessouky and Pang 2016). The e-hailing services make sure that the aggressive and ill-
behaved passengers are being blocked by the company if they continue to get low ratings from
the drivers.

4
DISRUPTIVE INNOVATION
The e-hailing services have a long-term effect on the personal transportation industry
(Rosenblat and Stark 2016). There is significant amount of competition between the cab taxi and
the e-hailing services. The e-hail competitors have created a stiff competition in the markets as
they give more benefits to the customers (Schechtner and Hanson 2017). They also give an
increased supply of cars in the market due to which the customers do not need to book the
traditional taxis.
Rosenblat and Stark (2016) states that the e-hailing services are some of the brainchild of
the sharing economy. These services have known to have created quite huge number of job
opportunities as compared to jobs that it has destroyed. The e-hailing drivers tend to have higher
income than that earned by the traditional taxi drivers (Hamari, Sjöklint and Ukkonen 2016). The
drivers get sufficient time to optimize their services and time (Rosenblat and Stark 2016). They
also get more time than the traditional taxi drivers with the passengers in the vehicle. The Uber
drivers are being said to capture the market and in especially peak times (Ban, Dessouky & Pang,
2016). Research shows that there have been around 30% drops in the taxi trips around the world.
As commented by Dawes (2016), more and more urban audiences are opting towards the e-
hailing options as they are cheaper and more convenient than the traditional taxi. This is
considered as a utility which is considered as an innovative disruption in the private transport
sector, which has caused much controversy (Schechtner and Hanson 2017). This is because of
the great benefit of the e-hailing service through the use of a mobile app instead of hailing a taxi
through hand on the streets. One of the main impacts of the e-hailing services is that allow the
various drivers to accept their passengers without having to depend on the instructions of his
employer (Hamari, Sjöklint and Ukkonen 2016). This takes place through the use of geo-
location, credit payment functionalities and reservation management. The customers enjoy a

5
DISRUPTIVE INNOVATION
greater freedom as they do not have to depend on paying the fees to the customers. There is
minimum flow of cash involved between the three parties involved in this process (Schechtner
and Hanson 2017). There is some cooperation which is necessary to maintain between the local
taxi operators, transport associations and the mobile technology firms (Hamari, Sjöklint and
Ukkonen 2016). There is some cooperation between the three entities. The e-hailing services
have opened the gates for private drivers, in which they need to have only the driving license and
a car so that they can provide private ride-sharing transportation (Hamari, Sjöklint and Ukkonen
2016). The frictions between the various fleet operators have been expanded into difficult
struggles between the professional associations and the various trade unions.
Nunes (2016) commented that the e-hailing apps have decreased the number of taxi
drivers by almost half in the past few years. There has been significant decrease in the yellow
cab taxis in Kuala Lumpur and in response the local taxi firms have started targeting the niche
markets in order to keep up the sales of the company. There has been great disruption in the
transportation sector in the last few years since the last couple of years. This has led to the
formulation of new policies for the taxi owners. They have undertaken alternative policies to
keep their sales intact in the market (Schechtner and Hanson 2017). Some of the taxi fleets have
adopted the new tech-savvy role as they have adopted the e-hailing programs so that they can
compete with Uber and similar firms (Gregor and Hevner 2016). There are other taxi owners
who have lowered their prices considerably so that they can attract the customers. There has been
a significant drop in the rate of taxi drive of the customers, which has put severe threat to the
industry (Schechtner and Hanson 2017). The e-hailing services are capturing the local transit as
well as urban infrastructure in which the company is able to able to influence the local political
scenario.