Regulation as a Source of Collective Inertia in Technology Emergence: Evidence from Fintech

We apply a paradox lens to technology emergence to explore incumbents’ ability to simultaneously attend to competing demands. Departing from the notion that incongruous tensions are not only socially-constructed but importantly also structural and innate to industry contexts, we study industry regulation as a source of collective inertia for incumbents’ ability to engage with emerging technologies. We propose that rigid regulation locks incumbents in on a compliance trajectory at the expense of future-oriented engagement with new technologies. We hypothesize that deviations from such compliance-focused strategies (temporarily) relax social constrains and enable incumbent experimentation. With our sample of 105 commercial banks in the context of fintech (financial technology) in the United Kingdom from 1999 to 2018, we find strong support for our hypotheses."