Knowledge, routines, and cognitive effects in nonmarket selection environments: An examination of the regulatory review of innovations

Research summary Evolutionary models of technological evolution highlight the cognitive underpinning of routines that shape organizational adaptation. However, research thus far has overlooked the possibility that cognitive effects might also shape selection. This study redresses this imbalance by examining nonmarket selection, focusing for that purpose on the regulatory review of innovations. It proposes that the more knowledge about different technologies is available to regulatory agencies, the more evaluation incongruities they face when evaluating a focal innovation, which increases the time for its regulatory review. It also proposes that this effect is attenuated when regulatory agencies are more frequently confronted with innovations drawing on new technologies. By elucidating cognitive effects that shape nonmarket selection, this study has theoretical implications for research on technological evolution and organizational learning. Managerial summary This study highlights influences on the regulatory review of innovations, an important hurdle that firms in many industries must clear before launching innovations into the market. The regulatory review of an innovation is largely thought to be facilitated by knowledge about that innovation and the technology on which it builds. But, this view overlooks that knowledge about other technologies that exist in the same domain of an innovation can create evaluation incongruities that hamper its regulatory review, extending its regulatory review time. This effect is attenuated when regulatory agencies are more frequently confronted with new technologies, which makes them more aware of distinctions that different technologies entail, thus reducing incongruities in the review of subsequent innovations.