A Study on Uber as a Disruptive Technology in the Taxi Industry

Running Head: UBER AS A DISRUPTIVE TECHNOLOGY 1
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UBER AS A DISRUPTIVE TECHNOLOGY 2
Introduction
In this era where self-employment has dominated the labor market, traditional labour
markets have been shaken to their core. Specifically, some jobs have become exceptionally
empowering in the past few years, whereas others have completely lost their prominence and
their appeal due to the changes which have been engineered by the technology. Being a taxi
driver has become more difficult, especially, with technology like Uber disrupting the industry
and how employees operate. This is one among the many examples depicting the way
technology and innovations have facilitated changes in different industries (Laurell &
Sandström, 2016).
A disruptive technology is any enhanced or a totally new technology replacing or
disrupting an existing technology, making it outdated. It is aimed at succeeding a similar
technology that has been in use before (Christensen, Raynor & McDonald, 2015). Because it’s a
new technology, it certainly has advantages, improvements and enhanced functionalities that
place it over the competitors. For instance, Uber has recently emerged as a disruptive technology
in the tax industry. It has been slowly adopted in the industry with an objective of replacing the
traditional Cabs. This report aims at scrutinizing Uber as one of the disruptive technology in the
Tax industry, how it has impacted the economy based on this industry, how it has impacted the
stakeholders in this industry and the potential solutions to counter the interruption.
The Taxi industry

UBER AS A DISRUPTIVE TECHNOLOGY 3
The Taxi industry is a very important part of travel and business sector in most countries
today. The industry has been relying on the advancement of Taxis across the streets. Therefore,
much as the history of this industry is keenly looked at, the initial taxi cabs can’t be ignored.
Although this industry has been traced back as early as 1630, when the vehicles drawn by horses
dominated the industry in Pars, the industry emerged officially in many countries late in 1800s
and by 1880, vehicles gained popularity within the industry and became more prevalent on the
urban areas. It came as no surprise to the horse drawn carts when business opportunists began to
hire the vehicles instead of the horse drawn carriages. Since then, the industry has undergone
many changes, molding it to what it has become today (Cramer & Krueger, 2016). The Taxi
companies have enjoyed in this industry for long due lacking competition. Until recently, this
industry has faced a major challenge from the current technological innovation based on ride-
sharing application. The Ridesharing companies, mainly Uber and the Lyft, have changed the
traditional operation of Taxicabs by the introduction of smartphone apps to match customers
who request rides with the drivers to take them to their destinations. Since its launch in 2009,
Uber has registered a significant market share in the industry worldwide (Uber, 2016).
Economic consequences
Economic debates on whether sharing economy companies like Uber and Airhub should
be permitted to continue with their operations of disrupting current suppliers in their respective
markets or not have persisted for long. Although the debate has gone extremely with each party
leaning on its point of interest, basing the debate on an economic point of view the response has
remained “Yes, of course”, and this is in consideration to the fact that consumers are able to get
more satisfied with the new technology compared to the case before. If passengers used to take a