For some time now, I have been studying law and business development. I have noted that, by and large, the relationship between regulation and business development has been conservative. First, businesses do not like rapid changes in laws till they can study the effect that the new law would have on their business. Second, an absence of legislation permits experimentation but can be risky. Third, a lack of appropriate legislation can also act as brakes to the diffusion of innovation since entrepreneurs are wary of regulatory voids. Fourth, if an innovation creates adverse social changes and stress. Defensive regulation may create or destroy industries. For the businessman caught unaware, this is like a black swan or a high-impact low-probability event. Fifth, rather than wait for the legislator to take such drastic action, it is in the interest of business to create an image of fairness and transparency. Therefore, by and large, the firms and policy-makers are conservative.
HTML PDFShare this article
