How to Regulate Disruptive Innovation - From Facts to Data
43 Pages Posted: 12 Jul 2016 Last revised: 17 Sep 2016
Date Written: July 11, 2016
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: Suggested Citation