Wharton Chapter 5

Understanding the political and legal environment that will impact a new technology is a vitally important part of assessing the potential value that a technology may have for your company. Through a review of the internet from the early days, through today, and into the future (at least as of the time of the writing of the book), the authors analyze the impact that governments can have on the development of an emerging technology. Ten lessons are presented that provide management insight into the potentials for this impact to occur.

One of the most common forms of government intervention is the creation of laws, regulations, and standards. These interventions are common and occur across a large number of industries, for example the FDA’s regulation of drug development and the FCC’s regulation of communication frequencies. These laws and regulations can offer significant advantages and disadvantages to companies. The FDA makes it very difficult to get new drugs approved, resulting in a major emphasis of pharmaceutical companies research on FDA approval. Likewise the FCC can provide tremendous advantages to companies that are able to create mini-monopolies by getting exclusive access to ranges of frequencies for their use (though at great cost to the company to purchase this range). While standards of often developed in the market governments can take an active role in encouraging or even developing the standards. Another major impact that governments can have on the development of emerging technologies is the funding of research and development of new technologies, either through educational support, defense research contracts, or other forms of grants and financial support. Certainly companies that are able to take advantage of these contracts and funds, have a major advantage over companies that don’t have this support; in fact in some industries companies live and die by the government contracts that do or don’t get. Governments can also greatly impact the growth of emerging technologies through direct support of companies and industries. Perhaps more now than at any other time in our nation’s history the government is taking a very active role in the support of companies. This brings forth the question of how will this new development affect the way business must assess technologies. With the new administrations push for alternative fuels, now may be an ideal time to get into the energy production business with a concept built around solar, wind, biofuels, or some other form of alternative fuel. There are a number of considerations that one must keep in mind while reviewing a new technology, and while it is often easy to overlook the impact that government may have, that would be a tremendous mistake, perhaps more so now than ever.