Regulators have just as much of an impact on whether or not as firm is able to disrupt an industry, as the innovative products and services of the firm itself, according to new research from Emlyon Business School.
There are many firms that innovate and have the potential to become disruptive, however the actions of a regulator largely impact on the possibility of the firm disrupting an industry.
Regulators can utilise their powers to block such firms from entering an industry, or can incorporate these firms, by removing, adding or modifying regulation to suit their innovative needs.
Nicholas Occhiuto, assistant professor at Emlyon Business School’s Center for Work, Technology and Organization, based his findings on a study into the launch of ride-hauling service Uber.
Through the research, he identified the original method regulators and lawmakers utilised – enacting blocking strategies, whereby they took measures to stop Uber from entering and disrupting the industry.
Professor Occhiuto said: “Many firms with innovative strategies or products and services look to enter a market incredibly bullishly, launching in a sector or region and loudly making themselves known to customers, competition and regulators too. Often this can ruffle many feathers, and regulators may see this as an opportunity to block said firms.
“However, my research shows that regulators can also work to enable disruptive firms and adapt regulation to their organizational goals, and make the market disruption a lot easier for the firm.”
The results of the research showcase the hugely important role that regulators and lawmakers have in the launch of innovative firms and whether or not they are able to actually impact and disrupt on an industry once they launch.
For innovative firms looking to launch in a new market, the researchers suggest it is wise for start-ups to pursue a non-market and corporate political strategy that engages with regulators and lawmakers, as opposed to simply focusing on ruffling feathers and disrupting the industry through innovation.
The research was published in the journal Socio-Economic Review.
