Title: Exploring the influence of regulation on the innovation process

Authors: Dieter De Smet

Addresses: Innovation Economics and Service Valuation Unit, Public Research Centre Henri Tudor, 29, Avenue John F. Kennedy, L-1855, Grand-Duchy of Luxembourg, Luxembourg

Abstract: The influence of regulation on the innovation process in the financial services industry is at present an area that is understudied. The Grand-Duchy of Luxembourg provides an interesting case study because it was the first to quickly and effectively transpose a major EU directive for financial services, namely the Undertakings for Collective Investment in Transferable Securities (UCITS) directive. Additionally, no prior study was done on the mechanisms which facilitated a faster innovation process in Luxembourg's financial services industry. The interplay between the government, professional associations and private actors was studied. A positive influence of this interplay on the implementation of the UCITS directive was found, offering a better understanding of the mechanism of externally induced innovation. The obtained results provide interesting new venues of research and indicate the importance of reputation and the existing mechanisms of relational embeddedness to enhance the innovation process in Luxembourg's financial services industry.

Keywords: innovation process; financial regulation; Luxembourg; financial services; relational embeddedness; reputation; UCITS directive; EU directives; European Union; government; professional associations; private actors.

DOI: 10.1504/IJEIM.2012.050444

International Journal of Entrepreneurship and Innovation Management, 2012 Vol.16 No.1/2, pp.73 - 97

Published online: 31 Jul 2014 *

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