Regulation and innovation under Industry 4.0: Case of medical/healthcare robot, HAL by Cyberdyne

Innovations using emerging technologies (artificial intelligence, robotics, the internet of things), are said to improve productivity and quality of life. On the other hand, the diffusion of such innovation involves risks and uncertainties regarding safety. Generally, these risks are managed by government by means of regulation. Yet it increasingly falls short on governing emerging technology due to innovations' global connectivity, commercialization and heightened risk & uncertainty. These pose challenges to firms for commercialization because emerging innovations often do not come under the existing product categories nor corresponding regulations. This study answers how product based on emerging technology commercialize, overcoming existing regulatory barriers on safety, using firm strategies and role of standards played, through an examination of the case of Cyberdyne, a successful medical/healthcare robotics company in Japan. Cyberdyne developed and commercialized the world's first product using cybernics in wearable medical/healthcare device. The case illustrates the increasing complexity of safety regulations and role of standards for firms to innovate applying emerging technologies. It concludes with an exploration of policy considerations regarding the regulation in dealing with emerging technologies under Industry 4.0.

JEL Classification: O33, F23, I18, L15

Keywords: Regulation, standards, Industry 4.0, emerging technology, robotics, institutional arbitration, rulemaking, Japan