Establishment of the open innovation theory for delivery platform based on the analysis of delivery industries in South Korea, UK, and China

□ Division of Electronics & Information System Principal Researcher (and guest professor at Seoul National University) Jinhyo Joseph Yun’s team at DGIST conducted joint research with the Nanjing University of Science and Technology’s Professor Lei Ma’s team and the UK Cardiff Metropolitan University’s Professor Zheng Liu’s team on the delivery platform industry, which is becoming a new issue for the 21st century market economy. The teams published an international joint research paper in the European Planning Studies, which will be out in May of 2022 in the UK.

□ Through on-site interviews and participatory observation, the joint research team investigated the impact of the delivery platform industry on restaurants, consumers, and delivery workers, and how it differs by each capitalist economy.

□ Jinhyo Joseph Yun, Principal Researcher of the Division of Electronics & Information System at DGIST said, “To solve these problems in the delivery industry, delivery platforms should pay sufficient wages to delivery workers, provide restaurants with enough revenue, and consumers with new consumer surpluses to become a source system that offers sufficient value to these three principal agents.” He further added, “For this, it is necessary to achieve open innovation where the delivery platform, delivery workers, and consumers actively participate in fully exchanging ideas and promoting multi-homing, which is to use multiple delivery platforms instead of being locked into a single delivery platform.” Meanwhile, along with the smart payment industry, which is another research topic of the team, Professor Yun's research team proposed that the smart delivery industry may become the key driver that enhances the sustainability of capitalism by shifting regressive capitalism of financialization, where all material production is reduced and converted into money transactions, the main cause of the stagnant capitalist market in the 21st century, back to real object-oriented capitalism.

Corresponding author’s email: jhyun@dgist.ac.kr

□ Human rights for delivery workers are protected the most in the UK, and delivery platform companies provide insurance for delivery workers, delivery boxes, and related training. In addition, in most UK delivery platforms, delivery workers have the freedom to refuse delivery without penalty. Platform operators cannot arbitrarily manipulate the delivery platform algorithm, allowing competition in good faith among delivery workers. However, the delivery industry has been unable to enter the developed restaurant industry since the traditional restaurant industry has grown sufficiently in the UK.

□ As for China's delivery industry, it turned out that delivery workers are making at least twice and up to four times more than the starting salary of college graduates. Prior to the development of the delivery industry, a restaurant culture of ordering over the phone and picking up food at the restaurant was quite prevalent in China, which has a huge population. The existing take-out culture and the emerging delivery platform industry formed a virtuous cycle. The advanced smart payment system unique to China is further accelerating the development of the delivery industry. However, Chinese delivery platforms have firm control and authority over delivery workers as suggested by a structure that does not give delivery workers the right to refuse deliveries and gradually reduces delivery orders as a way of imposing penalties for those who refused delivery more than a few times or failed to complete the delivery properly.

□ Korea's food delivery industry has developed significantly, earlier than the UK and China. A unique aspect of the Korean delivery industry is that there are companies that mediate between delivery platforms, delivery workers, and delivery workers and restaurants. In addition, they have a structure where delivery mediation offices sign contracts with 50 to 100 restaurants locally, and again, contracts with 10 to 50 delivery workers to mediate between them. Delivery platforms are, in fact, virtually connecting restaurants and delivery mediation companies and between restaurants and delivery workers, mainly through the smaller regional delivery mediation companies. This created a structure where the delivery fee is distributed among the delivery workers, delivery platform, and delivery mediation company. It acts as a factor that may cause delivery costs to rise compared to the UK or China, making single item delivery at low prices impossible.