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Driving Innovation Through Regulatory Design and Corporate Behaviour: A Case Study of Functional Food Industry in Japan

Summary

This study examines how government regulations on health claims for dietary supplements affect how companies in Japan develop and sell these products. The research found that companies willing to invest in their own clinical trials to prove their products work tend to create more successful products and gain bigger market share. The study suggests that well-designed regulations can actually encourage companies to invest more in research and create better, more innovative products rather than just copying existing ones.

Background

Japan’s functional food industry faces rising chronic diseases and healthcare costs, necessitating innovation in the healthcare sector. The study examines how regulatory design influences corporate behavior and R&D investments in dietary supplement companies. Japan’s Foods with Function Claims (FFCs) regulation provides a unique case study of regulatory frameworks affecting functional food innovation.

Objective

This study clarifies the effects of regulations and corporate behavior on innovation by analyzing company responses to the FFCs system from the perspective of clinical trial investments as R&D activity. The research examines how regulatory compliance strategies influence R&D investments and product differentiation in the functional food industry.

Results

A significant correlation (R = 0.66, p = 0.007) was found between companies’ FFCs engagement and preference for in-house clinical trials, indicating higher R&D investments. Further correlation (R = 0.66, p = 0.008) existed between in-house clinical trial rates and average product sales, suggesting returns on regulatory compliance. Company size, market presence, and industry origins significantly shaped regulatory strategies.

Conclusion

Flexible regulatory frameworks that encourage R&D investment promote innovation and competitive advantages in the healthcare sector. Companies actively complying with FFCs regulations conduct in-house R&D to accumulate knowledge and differentiate products, while those with limited compliance leverage external knowledge resources cost-effectively.
  • Published in:Foods,
  • Study Type:Case Study, Mixed-Methods Research,
  • Source: 10.3390/foods13203302, 39456364
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