Managing both the multi-stakeholder cooperation for a legal reform and the competition to build first mover’s advantage - Case of the diffusion of electric kick-scooter sharing service and 2023 Road Transport Law Amendment in Japan

Type de publication:

Conference Paper


Gerpisa colloquium, Bordeaux (2024)


Sharing services and electrification of mobility can contribute to realizing sustainability by reconciling economic and social progress without threatening the natural balance of the planet (Christoforou et al., 2021). The successful implementation of this service needs the collaboration of actors from different organizations and wise resource pooling (Deken et al., 2018). This collaboration also involves the public sector such as the state and cities: a close collaboration between the service provider and the public authorities is mandatory to face the multiple challenges of managing the quality of the operating process (Younes et al., 2020).
Over the last five years, micro-mobility, particularly e-scooter sharing services, has become an increasingly attractive mode of urban mobility (Younes et al., 2020). Since 2018, this service has become available in downtown areas in U.S. cities (Bai & Jiao, 2020). The success in the U.S. cities contributed to a rapid expansion of the same service to Europe (Foissaud et al., 2022) and many cities around the world (Gössling, 2020).
Back in 2002, in Japan, the National Police Agency (NPA) announced that the e-scooter shall be classified as motorized bicycle: e-scooters had been unsuitable for sharing service since users had to carry driver's license and wear a helmet. In July 2023, after the amendment of Road Traffic Law (RTL) which defines a new vehicle classification - special small size vehicle, the e-scooter sharing service started diffusing in Tokyo and in other cities. This full-scale spread of the service began five years behind Western countries’ one; how different service operators “cooperated” towards the legal reform favourable for the diffusion of e-scooter sharing service?
LUUP is an e-scooter sharing service provider founded in 2018. It outperforms other competitors and no other service provider is able to compete with LUUP in the city centre of the capital, Tokyo, or other metropolitan areas. How did it build such “competitive advantage”?
“Coopetition” is an important phenomenon in the mobility sector (Caplan, 2023; Shao, 2020) and even when it comes to the regulation definition (Yamada et al., 2023) while Resource Based View, one of the theories on competitive advantage, can become a more comprehensive theory by incorporating elements from stakeholder theory: allotting more room for cooperative behaviours (Freeman, 2021).
The purpose of the research is to analyse the five-year period between the foundation of LUUP in 2018 and the enactment of the RTL Amendment in 2023 so as to address the following research questions:
1) How did LUUP, as a first-mover, manage the cooperation with competitors and other stakeholders towards the favourable legal reform to realise its intended business model?
2) How did LUUP strike a balance through the interplay of competition and cooperation intensity to achieve innovation performance? (A research gap identified by Meena et al. (2023))
The authors combined a document analysis and a case study in chronology. The document analysis examined public documents of the last five years of the cabinet secretariat, of the Ministry of Land, Infrastructure, Transport and Tourism (MLIT), of the Ministry of Economy, Trade and Industry (METI), of the Ministry of Internal Affairs and Communications, of the NPA etc. The authors conducted interviews with the manager of LUUP and of Micro-Mobility Promotion Association (MMPA) and responsible personnel of different municipalities in Tokyo to understand how LUUP cooperated with stakeholders and built its competitive advantage.
In October 2019, the METI, the MLIT and the NPA gave a permission to the company to conduct several social experimentation projects aiming at modifying the RTL under a regulatory sandbox scheme.
In May 2021, a project team of the Liberal Democratic Party, published a document “Recommendations for deregulation to popularize electric scooters” based on the NPA’s “Interim Report of the Expert Panel on the Future of Electric Scooters''.
As a result of these, the RTL Amendment Bill was submitted to the 208th Diet session in March 2022 and was promulgated in April 2022.
In July 2023, the Amendment is enacted and e-scooters are classified as a newly defined "special small size vehicle": no driving licence is required to drive it and wearing helmet is not mandatory. Additionally, if e-scooter has a slow running mode with the maximum speed of 6km/h, it can be considered as an “exceptional special small size vehicle” and it can run on some pedestrian roads as well. This leads more e-scooters to have this dual-mode system that can be a dominant design of e-scooter.
The research shows that the case company mobilised a specific organisational capability to manage different public and private stakeholders so as to achieve the Amendment that was essential to realise its intended business model.
The research shows that the company strategically concluded a (public-private) partnership agreement with five municipalities in geographically diverse prefectures to demonstrate the social demands towards its service. The company also emphasized the utility of micro-mobility as a mean of last-mile transport for elderly people by demonstrating a different type of e-scooter with 4-wheels and wider footrest space. The company leads the creation of MMPA, as a voluntary association (: non-statutory body) that regroups private companies aiming at the promotion of the diffusion of micro-mobility technologies. To improve the social acceptance, the MMPA established its own safety guideline to make the private companies to comply to it.
Practical and theoretical implications
The research gives practical implications that 1) to realise a law amendment, simultaneously working together with two different entities of public, municipalities and the state, is essential while a company can use a partnership agreement with municipalities as evidence of social demand to ask a legal change to the state, 2) a mobility service provider can play a significant role in a law amendment of a vehicle definition that potentially determines a dominant design of the vehicle category. The research gives theoretical implications that a specific organisational capability and the related organisational strategy to deal with competitors and public authorities help to strike balance through the interplay of competition and cooperation intensity to achieve innovation performance.

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