How to Regulate Disruptive Innovation - From Facts to Data

43 Pages Posted: 12 Jul 2016 Last revised: 17 Sep 2016

See all articles by Wulf A. Kaal

Wulf A. Kaal

University of St. Thomas, Minnesota - School of Law

Erik P. M. Vermeulen

Tilburg University - Department of Business Law; Philips Lighting - Legal Department; Tilburg Law and Economics Center (TILEC); European Corporate Governance Institute (ECGI); Kyushu University - Graduate School of Law

Date Written: July 11, 2016

Abstract

Disruptive innovation creates increasing regulatory challenges. The reason for this is simple: Regulation is usually reactive, responding to facts. However, we currently live in a world of data, not facts. Regulation must therefore be proactive and dynamically responsive to data and trends. This paper discusses the following questions: (1) Why should regulators be proactive?, (2) When should regulators respond?, (3) What should regulators respond to? and (4) How should regulators respond? Using a dataset comprising over 77,000 venture capital deals with over 35,000 companies in the United States from 2005 to 2015, the paper shows how investment data can provide important feedback on innovation trends and associated risks for regulators, optimize the timing of regulation, and support anticipatory rulemaking.

Keywords: Disruptive Innovation, Venture Capital, Venture Investments, Dynamic Regulation, Feedback Effects, Optimized Information for Regulation, Anticipatory Regulation, Big Data

JEL Classification: K20, K23, K32, L43, L5, O31, O32

Suggested Citation

Kaal, Wulf A. and Vermeulen, Erik P.M., How to Regulate Disruptive Innovation - From Facts to Data (July 11, 2016). Jurimetrics, Volume 57, Issue No. 2, 2017 Forthcoming; U of St. Thomas (Minnesota) Legal Studies Research Paper No. 16-13. Available at SSRN: https://ssrn.com/abstract=2808044 or http://dx.doi.org/10.2139/ssrn.2808044

Wulf A. Kaal (Contact Author)

University of St. Thomas, Minnesota - School of Law ( email )

MSL 400, 1000 La Salle Avenue
Minneapolis, MN Minnesota 55403-2005
United States

Erik P.M. Vermeulen

Tilburg University - Department of Business Law ( email )

Philips Lighting - Legal Department ( email )

Amstelplein 2
Amsterdam
Netherlands

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE
Netherlands

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Kyushu University - Graduate School of Law ( email )

6-19-1, Hakozaki, Higashiku
Fukuoka, 812-8581
Japan

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