Abstract
The essential cause of the ‘Valley of Death’ is the reluctance of the private sector to invest in technologies which are perceived as too risky. This risk has usually been assessed in terms of technology maturity. However, uncertainty about whether a new product or technology complies with regulatory frameworks may also have an important effect on private sector investments. We use the cases of the Critical Path Initiative, in the pharmaceutical industry, and the Advanced General Aviation Transportation Experiments, in the general aviation industry, to analyze the role of regulatory agencies in decreasing three different types of regulatory uncertainty along the Valley of Death. We find that regulatory agencies play an important role as a social glue which helps coordinate industry-wide efforts. Based on the comparison between the two cases, we create theory to explain the effect of regulatory uncertainty on the shape of the Valley of Death. Our theoretical framework may help agencies detect the major sources of regulatory uncertainty, and adapt their policies accordingly to facilitate the traverse of emerging technologies across the Valley of Death.
