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Firm technological responses to regulatory changes: A longitudinal study in the Le Mans Prototype racing

Paolo Aversa and Olivier Guillotin

Research Policy, 2018, vol. 47, issue 9, 1655-1673

Abstract: Despite the critical role of regulations on competition and innovation, little is known about firm responses and related effects on performance under regulatory contingencies that are permissive or restrictive. By longitudinally investigating hybrid cars competing in the Le Mans Prototype racing (LMP1), we counter-intuitively suggest that permissive regulations increase technological uncertainty and thus decrease the firms’ likelihood of shifting their technological trajectory, while restrictive regulations lead to the opposite outcome. Further, we suggest that permissive regulations favour firms that innovate their products by sequentially upgrading core and peripheral subsystems, while restrictive regulations (in the long term) favour firms upgrading them simultaneously. Implications for theory and practice are discussed.

Keywords: Regulations; Environmental change; Technological innovation; System complexity; Technological trajectory; Knowledge; Performance; Hybrid vehicles; Le Mans Prototype racing; LMP1 (search for similar items in EconPapers)
Date: 2018
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