Fraunhofer-Institut für System- und Innovationsforschung ISI

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  • Publication
    When Regulatory Power and Industrial Ambitions Collide: The "Brussels Effect," Lead Markets, and the GDPR
    ( 2022)
    Martin, Nicholas orcid-logo
    ;
    Ebbers, Frank orcid-logo
    This chapter explores certain innovation-promoting effects of the GDPR and their geographical dispersion. It also shows that while the GDPR has sparked substantial innovation and the birth of a new industry in the field of “privacy tech,” or technological solutions for data protection compliance, this industry is largely dominated by North America-based companies. Despite the GDPR’s origin in Europe - and despite the hopes of European policymakers that it might spark a wave of new technology innovation in Europe - European companies seem to have struggled to establish themselves in this market. The chapter draws on two concepts from regulatory studies and innovation studies - the “Brussels effect” and regulation-induced lead markets - to explain this outcome, arguing that this surprising outcome (a European law sparking the birth of a new technology industry in America) derives not from idiosyncratic factors connected to the GDPR or even software industries, but from structural factors related to the logic of regulatory globalization.
  • Publication
    Unblackboxing the effects of privacy regulation on startup innovation
    ( 2018)
    Martin, Nicholas orcid-logo
    ;
    Matt, Christian
    Data-centric businesses have seen rapid growth in recent years, but their development is partly shaped by data protection and privacy regulation (DPPR). While it is often claimed that stricter regulation penalizes firms, there is scarce empirical evidence for this. Drawing on models from innovation economics and taking the example of startup innovation, we use a set of expert interviews to obtain first empirical evidence as a basis for our research. Our emerging results indicate that while DPPR has some negative effects on innovation, these are modest overall, partly because of lax enforcement. Moreover, there is evidence for systematic sectoral variation, with DPPR mildly hindering innovation in certain B2C and B2B markets, but spurring innovation in others. After completion, our work will provide a framework for firms and policy makers to assess the effects of DPPR on innovation.