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Exploring how social interactions influence regulators and innovators: The case of regulatory sandboxes

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  • Alaassar, Ahmad
  • Mention, Anne-Laure
  • Aas, Tor Helge

Abstract

Like incubators, regulatory sandboxes constitute a prominent mechanism to enable entrepreneurial activities that guide financial technology (FinTech) firms through regulatory frameworks in the financial industry. Because they are new, there is a lack of research on regulatory sandboxes; most studies have investigated legal aspects while overlooking the management perspective. To address this gap, this paper builds on incubation research studies to explore how social interactions within regulatory sandboxes influence the practices of regulators and regulatees, using social capital theory. An exploratory-abductive approach is adopted, using data collected from 16 semi-structured interviews. The findings indicate that regulator-regulatee social interactions increase the legitimacy, risk management capabilities, and knowledge of regulatory frameworks among regulatees and, as to regulators, increase their understanding of regulatory constraints and potential risks in enabling technologies, better inform them of regulatees’ support needs, and offer them early access to regulatory innovations. The findings also reveal that the practices of regulators and regulatees may be negatively affected due to lowered trust and discrepancies in expectations and underlying goals. This research contributes to the incubation literature by focusing on the micro and meso levels of knowledge exchange and the entrepreneurial finance literature by promoting the role of incubation models.

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  • Alaassar, Ahmad & Mention, Anne-Laure & Aas, Tor Helge, 2020. "Exploring how social interactions influence regulators and innovators: The case of regulatory sandboxes," Technological Forecasting and Social Change, Elsevier, vol. 160(C).
    • Handle: RePEc:eee:tefoso:v:160:y:2020:i:c:s0040162520310830
    DOI: 10.1016/j.techfore.2020.120257
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    2. Alaassar, Ahmad & Mention, Anne-Laure & Aas, Tor Helge, 2021. "Exploring a new incubation model for FinTechs: Regulatory sandboxes," Technovation, Elsevier, vol. 103(C).
    3. Soltanzadeh, Javad & Blind, Knut & Elyasi, Mehdi, 2023. "Exploring how regulators face platform business issues in the lifecycle stages: Evidence of iranian ride-hailing platform business," Telecommunications Policy, Elsevier, vol. 47(7).
    4. Ahmad Alaassar & Anne-Laure Mention & Tor Helge Aas, 2022. "Ecosystem dynamics: exploring the interplay within fintech entrepreneurial ecosystems," Small Business Economics, Springer, vol. 58(4), pages 2157-2182, April.
    5. Sánchez, Marisa A., 2022. "A multi-level perspective on financial technology transitions," Technological Forecasting and Social Change, Elsevier, vol. 181(C).
    6. Choudhary, Priya & Thenmozhi, M., 2024. "Fintech and financial sector: ADO analysis and future research agenda," International Review of Financial Analysis, Elsevier, vol. 93(C).
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    8. Lee, Sungdo & Seo, Yongseok, 2022. "Exploring how interest groups affect regulation and innovation based on the two-level games: The case of regulatory sandboxes in Korea," Technological Forecasting and Social Change, Elsevier, vol. 183(C).
    9. Ahmad Alaassar & Anne-Laure Mention & Tor Helge Aas, 2023. "Facilitating innovation in FinTech: a review and research agenda," Review of Managerial Science, Springer, vol. 17(1), pages 33-66, January.
    10. Laura Grassi & Simone Fantaccini, 2022. "An overview of Fintech applications to solve the puzzle of health care funding: state-of-the-art in medical crowdfunding," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-27, December.

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