In the article, “The Big Idea: Creating Shared Value”, the authors Michael E. Porter and Mark R. Kramer consider capitalism’s impacts on our society using economic, social, and environmental lenses. [1] They proposition that businesses grow and prosper at the expense of our society, instead of adding explicit and shared value to it. In the past, businesses best contribution to the economy was just their existence, providing that their growth required creating jobs and hiring new workers. Environmentally and socially, the authors contend that businesses had either neutral or negative impacts, because businesses considered these factors detrimental to profit and their bottom line. With the boom of the “Sharing Economy” with companies like Uber, Airbnb, and others, the authors argue that businesses have flipped the model, and are now generating economic, social, and environmental value for their suppliers and customers alike.
One interesting aspect of the future of the shared economy is regulation. Legislative and regulatory bodies in the United States have created and amended regulation for a capitalist business landscape from the beginning, and the authors of this article consider what sensible regulation might mean for the sharing economy. The sharing economy can disrupt and sometimes even replaces traditional businesses. Because the disruption is often swift and firm, regulatory bodies have trouble addressing the development of sensible legislation and regulation in a reasonable time. As stated clearly by the authors, “The right kind of government regulation can encourage companies to pursue shared value; the wrong kind works against it and even makes trade-offs between economic and social goals inevitable.”
Uber and Airbnb have faced a series if fascinating regulatory issues since their founding. The types of businesses they replaces, taxis and hotels, are heavily regulated to ensure the safety and rights of workers and users alike. In some cases, Uber and Airbnb have been banned entirely from cities or countries that can’t regulate them fast enough. [2] Because of a federal law that protects internet-based companies from liability for “improper user behavior”, Uber and Airbnb are interestingly protected from many of the same risks that taxis and hotels are held liable for. [3]
So what is the right amount and type of legislation for businesses operating in the sharing economy? Firstly, all of the regulations should be informed by technologists or specialists in each area to counter misinformation often seen in lawmakers regulating businesses that they don’t understand. When this criteria is met, sensible regulation can be generated and should have a few key components. Regulating bodies should set performance standards, but allow the company to make the ultimate decision on their method for achieving performance. They should require reporting and performance measurement systems, so their development is transparent and visible. The authors included this notion for regulation, which I quite agree with. They said, “appropriate regulations require efficient and timely reporting of results, which can then be audited by the government as necessary, rather than impose detailed and expensive compliance processes on everyone.” [1]
Because regulation can bolster or stifle beneficial innovation, sensible informed regulation should remain involved in the strategic conversation.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.