Analysis, Interpretation and Regulation

QUESTION

Concisely explain Lester & Piore’s distinction between analytic and interpretive approaches as they apply to regulation. Then, consider Saxenian’s account of Silicon Valley and Route 128. Make an argument about which kind of regulatory approach to technology development seems most appropriate given Saxenian’s argument about why Silicon Valley succeeded and Boston faltered. That is, which regulatory model do you think Saxenian would suggest as most appropriate to fostering Silicon Valley- like success, and why? Acknowledge any potential weaknesses or drawbacks to your selected regulatory approach, and concisely note why those weaknesses are nevertheless preferable to the alternative model of regulation, and/or how they might be minimized or tempered by astute policy makers (like you!).

ANSWER

Analytic and Interpretive Approaches in Regulation: Lester & Piore, the Saxenian’s Account […], and Innovation

Distinction Between Analytic And Interpretive Approaches As They Apply To Regulation.

The regulatory process calls for open-ended interpretation because the market is constantly evolving with the entry of new technologies. Depending on what needs to be achieved, there has to be an understanding of the importance of further development, potential and drawbacks, and the extent to which regulations can protect the public and firms. Therefore, regulations incorporate interpretative and analytical processes, which are opposites.

According to Lester and Piore (2004), “analysis” and “interpretation” are two complementary processes that make up a majority of the innovation concept. “Analytic” activity comprises the management theory ‘stuff’, historically known as identifying particular problems using a product or technology and pursuing immediate, efficient, and concrete procedures to solve those problems. On the other hand, “interpretive” activity is open-ended, crosses barriers, and collaborative discussion on products and potential technological changes. While the collaborative discussion element of “interpretive” tends to rely on the information brokering (bridging) ties, it emphasizes the contingent and easy-to-improvise process of sole participants approaching others’ ideas with an intent to combine and use them. In other words, Lester and Piore (2004) present the analytical process as dependent on the organization’s rules, regulations and norms, while the interpretive process is dependent on the flexibility and exploratory potential within the organization.

Saxenian’s Account of Silicon Valley and Route 128 and the Social Regulation.

The Saxenian’s account of Silicon Valley and Route 128 remarkably accounts for economic development and technological change based on network-based industrial systems. According to Saxenian, Silicon Valley succeeded, and Boston faltered, mainly because the former had open networks of communication and exchange while the latter focused on its vertical integration structure. Silicon Valley collaborated, developed alliances, and shared information while their counterparts maintained secrecy, self-containment, and fewer interfirm contact.

Social regulation (labor market regulation), which relates to collaboration, seems like the appropriate regulatory approach Saxenian would suggest to foster Silicon Valley because of the labour market flexibility. According to Samford (2015), collaboration is important for innovation because it shelters enterprises in it from the fangs of market competition. Seemingly, high levels of competition lead to low levels of innovativeness. This is where research and development processes like interpretation suit best as they foster short-term solutions and innovations while the enterprises engage others in the bracket for upgrade efforts (Samford, 2015). Moreover, social regulations through collaborative efforts with regard to innovation will complement other policy instruments since they can address different processes and product technologies’ gaps.

The advantages attached to social regulation make it the go-to approach because of what the enterprises stand to gain. For instance, the government, given the capacity to get involved in market economies, can promote cross-organizational brokering and create blockages of competition (Samford, 2015). Still, the government’s role can extend as far as sponsoring collaborative spaces where new ideas emerge. Although such makes social regulation preferable to Saxenian, there are shortcomings related to ambiguity and liability attached to it. For example, ambiguity might arise in collaboration and sharing of ideas, which may disregard social regulation as a preferable option. Still, social regulation may not work in sectors like the US automotive industry because of the characteristic incremental innovation.

Potential Weaknesses of the Social Regulation

Unlike the social regulation perspective, where there is protection against competition, economic regulation suggests that competition is healthy for innovation (Piore, 2016). Therefore, the ‘sheltering’ aspect contained in collaboration in the social regulation may not be preferable from the economic regulation perspective. Furthermore, the sheltered collaborative spaces may contribute to gaps like uncertainties about the emerging technologies’ regulation and adoption, mainly caused by regulatory discretion. Nonetheless, social regulation can potentially be backed legally, and the conversation on the type of regulation be used to move low-tech firms toward the best innovation, which may not be realized by alternative policy approaches.

References

Lester, R. K. & Piore, M. J. (2004). Innovation: The Missing Dimension. Harvard University Press, Cambridge, MA.

Piore, M. J. (2016). Efficient and Effective Economic Regulation in a Confusing Technological Environment. Evolving Approaches to the Economics of Public Policy: Views of Award-Winning Economists, 145. https://economics.mit.edu/sites/default/files/2022-09/Learning

Samford, S. (2015). Innovation And Public Space: The Developmental Possibilities Of Regulation In The Global South. Regulation & Governance, 9(3), 294-308. https://doi.org/10.1111/rego.12077