The effect of standards and regulation on radically new innovations

There is controversy among scientists whether standards and regulations hamper or stimulate innovation. Using a new approach and a different data set, we argue with Swann and Lambert (2010) that this controversy is based on a false antithesis. Building on Swann and Lambert (2010), Swann (DTI, 2005) and King (2006) we focus on pre-existing standards and regulations, i.e., those that are not specific for the product innovation at hand and available prior to the development of the innovation. The effect on the innovation process is assessed in terms of the time interval between the invention of a technological principle and the first marketable product (development phase; Ortt, 2010), and the successive time interval that covers the period up to the start of large-scale industrial production and diffusion (adaptation phase; Ortt, 2010). We analyse fifty heterogeneous cases of radically new product innovations from the year 1850 onward. Our results indicate that pre-existing standards and regulations significantly shorten the adaptation phase; this effect is not found for the development phase of innovations. The effect on the adaptation phase is moderated by the novelty of the technology involved and the scope of the technological system. That is, pre-existing standards and regulations shorten the adaptation phase in particular for innovations that are part of large technological systems and contain new technologies. As the adaptation phase is often a time- and capital-intensive phase for industry, this accelerating effect on the diffusion of innovations is highly relevant for innovation managers and policy makers.