Regulator reputation and the successful governance of innovation: Lessons from financial technology supervision

Abstract

When innovation emerges, regulatory agencies are frequently called upon to intervene. They must find ways to manage risks, facilitate ‘good’ innovations, and guard against ‘bad’. Such regulatory governance is a legal and administrative challenge, but also a stakeholder management one. Regulators need to find ways to manage stakeholder expectations. They must engender stakeholder support for regulatory intervention over the innovation process. In this context, this dissertation argues a strong regulator reputation is a condition for successful innovation governance. Reputation should be placed – by both scholars and practitioners – alongside well-established success factors like a strong formal mandate, adequate administrative capacity, and conducive organizational culture. This argument is developed through a series of studies about the role of regulator reputation in the governance of recent innovations in finance (‘fintech’) in the United Kingdom, the United States, and Australia. This dissertation is among the first studies to evaluate the role of regulator reputation in successful innovation governance. Reputation, innovation, and regulatory governance scholarship are integrated into novel, documented methodological tools and theoretical and analytical frameworks. Findings contribute to addressing gaps in extant theory and literature on the topic, and present several concrete roles reputation plays in successful innovation governance. Collecting data directly from the managers of innovative start-up firms, this offers a rare glimpse into their attitudes to regulators and regulation; sometimes challenging mainstream theories of compliance and cooperation. For regulatory professionals, this dissertation offers rich insights into ‘what works’ in practice and why.