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Dynamic regulatory experimentation and innovation trajectories: Evidence from Korea's battery industry and global sandbox governance

Year: 2026

Type: article

Abstract: Regulatory sandboxes have emerged as key instruments of adaptive governance, allowing governments to balance innovation and accountability through controlled policy experimentation. Yet, empirical evidence on how such mechanisms shape firm behavior and innovation trajectories remains limited. This study examines how dynamic regulatory experimentation influences firm growth, technological learning, and institutional adaptation, focusing on South Korea's battery industry—one of the world's most active testing grounds for sandbox governance. Employing a mixed-methods design, the research integrates qualitative case studies, policy document analysis, and two quantitative approaches—fuzzy-set Qualitative Comparative Analysis (fsQCA) and Difference-in-Differences (DiD) modeling—based on a panel of 84 firms from 2017 to 2023. The results reveal that sandbox participation significantly enhances sales growth, R&D intensity, and ESG-linked investment while reducing time-to-market. Three distinct causal pathways are identified: (1) regulatory-enabled growth driven by coordinated policy support, (2) market-led growth anchored in R&D and ESG strategy, and (3) start-up hybrid models combining sandbox participation with public subsidies. Comparative benchmarking with sandbox regimes in the United Kingdom, Singapore, China, and the European Union demonstrates that Korea's model uniquely integrates industrial policy, sustainability goals, and accountability safeguards. The study advances the concept of Dynamic Regulatory Learning—a cyclical process in which experimentation, feedback, and policy redesign co-evolve with technological innovation. By linking firm-level outcomes to institutional learning, the paper contributes to the literature on experimental governance, mission-oriented innovation policy, and sustainable industrial transformation.

Source: Technological Forecasting and Social Change

DOI: 10.1016/j.techfore.2026.124583

Author: Min Jae Park

Institution: Ajou University

Language: English

Topic: Regulation and Compliance Studies

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Industry, innovation and infrastructure, Peace, justice, and strong institutions, Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $3,490