Nanotechnology has frequently been described as the technology of the 21st century. It is recognized as a powerful technology, impacting research and development across many industries. Although nanotechnology products have made an entry into the market, the regulation of this technology still lacks clarity. The need for better regulation has been suggested by governments of many countries and scholars worldwide. The potential of nanotechnology is enormous, with its possible application in many industries and areas of society. Investors have high expectations of success to be derived from nanotechnology, and many investments have poured into nanotechnology R&D. However, government regulation is an important determinant regarding the direction of nanotechnology. Success or failure may very well be determined by the regulatory approach taken.
The complexity of regulatory approach for nanotechnology can be analysed by the “4W1H” approach; when, why, who and how are the factors contributing to the difficulties in regulating nanotechnology. Variation in any of these factors contributes to differences in the expected impact of regulation across nanotechnology sectors. Regulations are often described as barriers to innovation, whereby new rules place restriction on the development and Commercialization of new products. Neo-liberal economists have asserted that the country that adopts regulations at an early stage often loses its competitive advantage, thereby placing the country at an economic disadvantage. In the case of nanotechnology, these economists believe that these restrictive regulations repel investors and weaken the ability of said country to compete globally.
Surprisingly, there are no counter-arguments in the literature that assert that early and incremental introduction of regulations might actually enhance the development of nanotechnology sectors.
A model was proposed in this study to investigate whether the time of implementation and type of regulatory approach had significant impact on the trajectories of different nanotechnology sectors. It was postulated that the modified version of Fama’s equation can also be a useful way of measuring regulatory impact in a range of outputs including number of NCEs (number of chemical entities) introduced, sales in dollar value, number of patents, volume in gallons, R&D expenditure and number of AIs (active ingredients) introduced.
The purpose of this exploratory study is to investigate the impact of regulation on new technologies by strategically evaluating the impact of regulations at different time points of technology advancement and using a hypothetical model for predicting the trajectories of different nanotechnology sectors. Case studies of various industries that faced regulatory change were used to test the credibility of the hypothetical model. These include cases from the pharmaceutical industry, the chemical industry, alcohol prohibition, cosmetics, genetically modified organisms, agrochemicals, asbestos, and hospitality industries.
Rensselaer Lally School of Management and Technology introduced an industrial life cycle of nanotechnology development in 2004. It is the contention of this thesis that the trajectory shown in Figure 1 is naïve as it lacks consideration of the possible regulatory impact on this life cycle.
By acknowledging the weakness of such a model, this study contends that the trajectory of nanotechnology may be highly impacted by regulatory change. The examples from other industries illustrate that the regulatory framework can affect the trajectories of various industries. Several possible typical patterns of industry trajectories are postulated based on different regulatory approaches. Postulated patterns are further applied to nanotechnology sectors in order to predict the possible trajectories of each sector under different regulatory approaches.
It is concluded in this study that the early and incremental (ex-ante) regulatory approach is better for long term industry growth; however, late and sudden (post-hoc) regulatory approach is favoured from the revenue perspective.