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Regulatory sandboxes have emerged as key instruments of adaptive governance, allowing governments to balance innovation and accountability through controlled policy experimentation. Yet, empirical evidence on how such mechanisms shape firm behavior and innovation trajectories remains limited. This study examines how dynamic regulatory experimentation influences firm growth, technological learning, and institutional adaptation, focusing on South Korea's battery industry—one of the world's most active testing grounds for sandbox governance. Employing a mixed-methods design, the research integrates qualitative case studies, policy document analysis, and two quantitative approaches—fuzzy-set Qualitative Comparative Analysis (fsQCA) and Difference-in-Differences (DiD) modeling—based on a panel of 84 firms from 2017 to 2023. The results reveal that sandbox participation significantly enhances sales growth, R&D intensity, and ESG-linked investment while reducing time-to-market. Three distinct causal pathways are identified: (1) regulatory-enabled growth driven by coordinated policy support, (2) market-led growth anchored in R&D and ESG strategy, and (3) start-up hybrid models combining sandbox participation with public subsidies. Comparative benchmarking with sandbox regimes in the United Kingdom, Singapore, China, and the European Union demonstrates that Korea's model uniquely integrates industrial policy, sustainability goals, and accountability safeguards. The study advances the concept of Dynamic Regulatory Learning—a cyclical process in which experimentation, feedback, and policy redesign co-evolve with technological innovation. By linking firm-level outcomes to institutional learning, the paper contributes to the literature on experimental governance, mission-oriented innovation policy, and sustainable industrial transformation. • A mixed-methods analysis of how sandbox mechanisms shape firm-level innovation in Korea's battery sector. • fsQCA identifies three causal configurations leading to high firm growth under regulatory experimentation. • DiD analysis show sandbox participation increases sales growth, patent filings, and accelerates time-to-market. • Institutional document analysis maps the policy logic and evolution of Korea's experimental regulatory regime. • The study reframes regulators as enablers of innovation through embedded, adaptive policy instruments.
Min Jae Park (Mon,) studied this question.