The Impact of Using Technology and Intensified Law Enforcement and Firm Innovation

Abstract

The relationship between law enforcement intensity and firm innovation has gained increasing attention in recent years. Intensified law enforcement—through stricter regulatory oversight, anti-corruption initiatives, and the reinforcement of competition law—reshapes the external business environment and compels firms to adapt their strategies. On the one hand, stronger enforcement reduces opportunistic behavior, limits unfair competition, and creates a level playing field that can encourage firms to invest in research and development (R&D). Economic analysis has also had a significant impact on the legal system and case rulings. For instance, the concept of collective dominance has been gradually developed in terms of the theory of collusion in repeated interactions, the analysis of the factors that determine effective competition has become more sophisticated, the analysis of agreements between firms has become more effect-oriented, and quantitative methods have gained importance.  However, the research explores procedural reasons why enforcement has occasionally used economic reasoning in faulty or speculative ways. The article evaluates the Commission's evidence-gathering methodology in the context of the legal and economic literature.  It is determined that although the Commission's recent modifications do address the system's primary flaws, they might not yet provide the best possible use of economic theory and evidence in real-world situations. The findings highlight the importance of designing enforcement strategies that safeguard market integrity while fostering an environment conducive to innovation-driven growth.