Firms without Value: Uber Global Wealth Chains

The literature on Global Value Chains has shown that by displacing risks and costs and retaining activities which add greatest value, lead firms may appropriate a larger share of value within a supply chain (Gereffi et al. 2005). However, lead firms must often respond to the financialized pressures of maximising shareholder value, which they achieve through the payment of dividends, share repurchase or the management of assets to maximize the market value of its traded shares (Froud et al 2006; Lazonick & O’Sullivan 2000). And although there is some association between a firm’s ability to extract profit from a value chain and its ability to create shareholder value, the relation is not deterministic. For example, the valuation of firm assets is determined by future cashflow expectations rather than their value capture capacity in the present. Similarly, a firm’s ability to make shareholder distributions is governed by its ‘distributable reserves’, not its current profits – which creates internal incentives to engage in financial engineering to maximise those reserves. These issues highlight the dual identity of the firm. It is at the same time a governance agent within a GVC able to exercise power to maximise value appropriation, but it is also an artefact of accounting and law within a Global Wealth Chain (GWC) (Seabrooke & Wigan 2017) - an arrangement of holding companies and accounting techniques which allow the firm to configure itself in ways that increases its valuation and maximises its distributable potential. This paper takes one extreme example – the case of Uber – to explore this dual identity and the inseparable relation between the value chain and wealth chain. Uber creates no profit from its value chain, but it does increase its value through, amongst other things, the promise of future monopoly profits generated by a workforce that are not its legal employees. This paper explores the notion that Uber’s GVC could be understood as a form of collateral that is pledged in capital markets to raise the debt and equity investments that sustain its operations. Those funds are in turn managed through a GWC that involves four transformations: jurisdictional, temporal, identity and liquidity. Those transformations are underwritten by law, serve to protect Uber’s market value and maximize its future distributable potential.