I. Introduction
Products from interdisciplinary innovation are increasingly transforming social systems, necessitating consideration from multiple agencies and regulations across traditional industry and regulatory boundaries.Footnote 1 Existing regulations struggle to effectively address these novel products, requiring adaptable and comprehensive regulatory approaches.Footnote 2 This study terms these products as “heterogeneous products” to express their complexity and diversity, and aims to address the challenges of regulating products arising from technological convergence.
Regulatory bodies have attempted to address this gap through measures like sandbox systemsFootnote 3 ; however, these efforts often remain fragmented and industry-specific. This piecemeal approach hinders the development of a generalised regulatory design framework, leading to inconsistencies and stalled harmonisation, even in traditionally unified domains like aviation. For instance, the Federal Aviation Administration (FAA) and the European Union Aviation Safety Agency (EASA) have adopted divergent approaches to (electric) vertical takeoff and landing (VTOL) aircraft with heterogeneous elements of rotary-wing and fixed-wing aircraft.Footnote 4 This divergence exemplifies the regulatory challenges for cross-disciplinary products and highlights the need for a structured, theoretical and systematic approach to balancing risk and innovation.Footnote 5
To address this regulatory challenge, this research asks: first, how do heterogeneous product characteristics influence regulatory frameworks? Second, what key principles should guide effective regulations for these products? This study employs a systematic analytical framework and comparative case studies of VTOL and roadable aircraft to analyse the complex interplay between heterogeneous product composition and corresponding regulatory design. Ultimately, the research aims to contribute to better understanding of this interplay and to provide actionable insights for improving regulatory design in an era of technological convergence.
II. Literature review
1. Interpretation of heterogeneous products
The core challenge lies in the fact that heterogeneous products do not conform to established technological and market categories, thereby creating significant definitional and jurisdictional ambiguities for regulatory authorities.Footnote 6 While Kodama, Tidd and Freddi have described various ways technologies combine or fuse to create novel products,Footnote 7 these new configurations disrupt legally defined product classifications and regulatory mandates, creating definitional challenges that are not merely semantic but carry profound implications for which agency has jurisdiction, which rules apply, and whether existing safety and performance standards are adequate.Footnote 8
2. The rising prevalence and impact of heterogeneous products
Interdisciplinarity plays a critical role in developing new technologies and products.Footnote 9 For example, complex products combining drugs, devices, and biological components in the healthcare industry immediately raise questions of primary regulatory jurisdiction and the adequacy of existing testing and approval pathways designed for single-component products.Footnote 10 The interpretation of the primary function determines the lead regulatory agency and the applicable legal framework, directly influencing development strategies and market access.Footnote 11
In the mobility industry, hybrid technology in the automobile area, combining engine and motor technologies, serves both as transitional and complementary technologies.Footnote 12 The advent of novel product classification rendered imperative the development of safety and fuel efficiency standards at the national level; simultaneously, efforts were directed towards their international harmonisation.Footnote 13 Furthermore, technological advances like electrification, automation, and VTOL mechanisms, have enabled innovation in urban aviation, including new aircraft designs, services and business models.Footnote 14 To realise the urban air mobility concept, roadable aircraft combining vehicle and aircraft technologies and VTOL aircraft combining conventional rotorcraft and fixed-wing aircraft technologies are being developed.Footnote 15 The introduction of such novel concepts and products extends beyond technical development, creating complex governance demands. These include the imperative to establish new aircraft certification standards, devise appropriate operational control systems and plan for social infrastructure like landing sites – each presenting considerable challenges to existing regulatory capacities and requiring integrated policy responses.Footnote 16
Technological convergence occurs at the intersection of industry boundaries.Footnote 17 SchwabFootnote 18 called for social transformation to address the fourth industrial revolution, “characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.” This systemic shift creates widespread pressure on legal and regulatory systems to adapt, moving beyond sector-specific rules towards more holistic governance approaches.Footnote 19 The cross-sectoral and transnational nature of these innovations disrupts existing industrial and legal frameworks, requiring a re-evaluation of regulatory tools and institutional capabilities.Footnote 20
3. Regulatory response and challenges for heterogeneous products
In the healthcare industry, regulators define a combination product as a product comprising two or more regulated products.Footnote 21 The US FDA established the Office of Combination Products to streamline their review and implemented a scheme to identify the primary function and responsible agency sections.Footnote 22 While a step towards integrated governance, such mechanisms still face challenges with increasingly complex product combinations and evolving scientific understanding.Footnote 23 The tobacco industry’s experience with electronic cigarettes illustrates how varied legal interpretations and policy priorities can lead to fragmented regulatory landscapes. Regulatory responses across the US vary widely, resulting in a patchwork of rules, with some states classifying e-cigarettes as distinct from traditional tobacco products and subjecting them to different regulations, whereas others categorise them as tobacco products by applying existing tobacco regulations.Footnote 24
In the mobility industry, regulations concerning aircraft certification and navigation for new types of mobility, including VTOL aircraft, have been considered globally, but lagged behind the speed of technological advancement.Footnote 25 The FAA, with the National Aeronautics and Space Administration and the industry, has advanced measures for new type mobilities, including type certification.Footnote 26 The EASA has prepared special conditions for VTOL aircraft and regularly updated requirements to meet the urgent need for clarity.Footnote 27 However, US–EU regulatory responses to VTOL aircraft have diverged.Footnote 28
Transatlantic risk regulation between the US and the EU is characterised by a dynamic tension between convergence and divergence. While globalisation and international bodies encourage harmonisation,Footnote 29 differences persist.Footnote 30 These are rooted in contrasting regulatory philosophies, notably the EU’s precautionary principle versus the US’s reliance on cost-benefit analysis and distinct institutional structures.Footnote 31 DreznerFootnote 32 also notes that such divergences can be sustained by the distinct politico-economic objectives of major regulatory powers. Heterogeneous products and differing approaches to them add further complexity and divergence.
Recognising these challenges, international bodies and national governments have explored new regulatory models. The Organisation for Economic Co-operation and Development (OECD) has advocated for a more coherent, coordinated and agile regulatory approach like outcome-based regulation and sandboxes through effective inter- and intra-governmental coordination.Footnote 33 The United Kingdom (UK) offers AI and digital regulation services to support the developers of products requiring multiagency/multi-regulation considerations.Footnote 34 There has been a call for a cross-regulatory body to provide consistent advice to companies on novel healthcare technologies that do not fit within existing regulatory frameworks.Footnote 35 Additionally, a consistent classification system is needed to determine the appropriate regulatory authority for various products, alongside a roadmap outlining regulatory pathways. In response, the UK government has introduced the Regulatory Innovation Office to act as a coordinator for emerging technologies.Footnote 36
4. Shortcomings of current discussion on heterogeneous products
Traditional industry-specific and nation-based regulatory approaches struggle with multi-element heterogeneous products, and the generalised approaches across industries remain unclear, despite the increasing demand for cross-disciplinary and cross-border regulations. Moreover, the nuanced ways in which regulatory interpretation of a product’s characteristics shapes the entire regulatory pathway, and leads to divergence even for similar technologies, is not fully elucidated. While existing transatlantic regulatory literature explains divergence through broad philosophical and institutional lenses, it often lacks a granular analysis of how these factors play out at the level of specific product classification for novel, interdisciplinary technologies. While harmonisation can facilitate trade and cooperation, regulatory differences can cause trade disputes, competition and challenges for multinational corporations.Footnote 37 Understanding the drivers of both convergence and divergence is therefore crucial for policymakers fostering global cooperation and managing conflicts.
III. Research design
1. Analytical framework
This study adopts a qualitative comparative case study methodology. Incorporating innovation models from Tidd, Kodama and Freddi for the product side, as well as regulatory frameworks by the US FDA for the regulation side, this research develops a novel analytical framework that examines effective regulatory design for heterogeneous products by analysing product composition, regulatory design, and their relationships (Fig. 1). Using this framework, we scrutinised how regulatory responses differ for various products.
Figure 1. Analytical framework for heterogeneous products and regulations.
Note: Each product (or regulatory element) is indicated in red or blue. P1 and P2 represent the product elements for heterogeneous products, whereas R1 and R2 represent the regulatory elements for heterogeneous regulation.
HP: heterogeneous product, HR: heterogeneous regulation
a. Product characteristics
The left side of the diagram shows the relationship between product components and the product, drawing on Tidd’s innovation model.Footnote 38 However, Tidd’s model did not explicitly incorporate the idea of spanning two or more different product elements; hence, to clearly show the concept of a “heterogeneous product” consisting of two elements, the components are called P1 and P2. Regarding types of heterogeneous products, similar concepts have been presented, such as “fusion-type” from “technology fusion” by Kodama,Footnote 39 “combination-type” from “accumulation of autonomous technologies” by FreddiFootnote 40 and “combination products” by the US FDA.Footnote 41 However, this framework simplifies aspects, allowing for flexibility in describing variations in heterogeneous combinations.
In this case study, the features of heterogeneous products were first confirmed. After decomposing the product into P1 and P2, the characteristics of each were determined. Subsequently, the performances of these elements when combined were analysed. Using this profile, the regulatory interpretation of the products was examined and classified into fusion-type or combination-type.
b. Regulatory characteristics
Regarding regulatory design on the right of the framework, based on the literature review, there was no precedent model systematically illustrating the flow of developing regulations; however, the US FDA’s regulatory response was schematised, in which multiple regulations in different areas were appropriately implemented for a single product.Footnote 42 In the regulatory design flow, the regulations for P1 and P2 are referred to as R1 and R2, respectively. Heterogeneous regulation consists of R1 and R2 and corresponds to a heterogeneous product in which heterogeneity is judged by the regulator(s). The regulatory design process should not be independent of product development; indeed, it is indispensable for evaluating the interrelationship between regulation and innovation given the impact of the regulatory design process on innovation.Footnote 43 Based on this interrelationship, the flows for product development and regulatory design were connected.
In this case study, the features of the regulations and technical guidance corresponding to the product were identified. After clarifying R1 and R2, which constitute heterogeneous regulation, the mandated requirements and how to address heterogeneous products were analysed.
c. Relationship between products and regulations
The actual review responses and the responsible organisations, as designated by the regulatory agencies were identified. Subsequently, by applying this relationship to the analytical framework, the correspondence between the products and the regulations was determined.
2. Case selection
VTOL and roadable aircraft were selected for the case study. VTOL aircraft were chosen to investigate why the regulatory response differed between the US and the EU. Roadable aircraft were selected for comparison as heterogeneous products in the same industry because roadable aircraft are also called flying cars, similar to VTOL aircraft. Analysis of these cases offers insights into the influence of varying regulatory approaches, shedding light on the regulatory challenges posed and the key components of effective regulatory frameworks.
To examine the relationship between products and regulations, given that no VTOL aircraft are currently marketed, Joby Aviation’s JAS4-1 and Archer Aviation’s M001 (US cases), and Volocopter’s VoloCity and Lilium’s Jet (EU cases), were selected.Footnote 44 Because there are no roadable aircraft on the market, products from Terrafugia, AeroMobil, and PAL-V, confirmed to be advancing development and test flights, were selected.Footnote 45 Literature and regulatory documents were selected based on searches using keywords such as VTOL and roadable aircraft on the Web of Science as well as the websites of the FAA and EASA, according to the relevant content.
IV. Result
1. VTOL aircraft
a. Product characteristics
VTOL aircraft have the functional elements of rotary-wing aircraft (vertical takeoff and landing), and fixed-wing aircraft (propulsion).Footnote 46 To achieve the typical flight mission profile of a VTOL aircraft, a new conceptual design approach was needed, considering the elements of both conventional fixed-wing and rotary-wing aircraft.Footnote 47 By sublimating both elements, the product revolutionised the market, enabling new human and goods movement in unserved places.Footnote 48
Considering these characteristics, the VTOL aircraft can be segmented into P1, which can take off vertically and hover like a rotary-wing aircraft, and P2, which is equipped with propulsion similar to that of a fixed-wing aircraft (Figs. 2 and 3). In the US, the FAA stated that a VTOL aircraft potentially falls under a combination of all categories of existing aircraft standards.Footnote 49 On the other hand, the EASA recognised VTOL aircraft as a new category, as stated belowFootnote 50 :
Despite having design characteristics of aeroplanes, rotorcraft or both, in most cases EASA was not able to classify these new vehicles as being either a conventional aeroplane or a rotorcraft as covered by the existing certification specifications. Applying either the certification specifications for aeroplane or for rotorcraft, depending on whether they are rather an aeroplane or rather a rotorcraft, and only adding some modifications would not ensure equal treatment. These new types of vehicles are designed to address the same new market – even though not always the same segments.
Figure 2. VTOL aircraft in the US.
Note: Each product (or regulatory) element is shown in red or blue.
Figure 3. VTOL aircraft in the EU.
Note: Each product (or regulatory) element is shown in red or blue and the fusion product (or regulation) comprising each component is shown in purple (a mixture of red and blue).
These interpretations demonstrate that VTOL aircraft are regarded as combination-type in the US, whereas they are regarded as fusion-type in the EU (Figs. 2 and 3).
b. Regulatory characteristics
The US regulatory framework for aviation is codified by 14 CFR administered by the FAA. Advisory Circulars (ACs) provide interpretations and supplementary explanations of these regulations, while Orders and Notices serve as guidance for FAA personnel. Type certification standards are defined within 14 CFR, including airworthiness standards (e.g., Part 23 for normal category airplanes, Part 27 for normal category rotorcraft) and environmental standards (e.g., Part 34 for fuel venting/emissions, Part 36 for noise).
For VTOL aircraft type certification, applicants can initiate the process using Part 23 or Part 27.Footnote 51 However, the FAA, in consultation with the applicant, can apply the most appropriate standards based on the VTOL aircraft’s design, intended use and operational methods. Although no generalised standards for VTOL aircraft have been created, Part 23 was made more flexible by changing it to performance compliance requirements, making it possible to accommodate new aircraft structures and propulsion methods.Footnote 52 In addition, when applying existing standards proved challenging, it was classified as a special class under Part 21.17(b), where existing standards for airplanes or rotorcraft were appropriately combined and new special standards were set for elements that could not be covered by existing ones.Footnote 53
The EU’s aviation regulatory framework consists of the Basic Regulation, adopted by the European Parliament and the Council of the European Union, and its Implementing Rules, adopted by the European Commission. The EASA adopts Certification Specifications (CSs), Acceptable Means of Compliance (AMC), and Guidance Material (GM). CSs are technical specifications and analogous to 14 CFR Parts, including CS-23 (normal category aeroplanes) and CS-27 (small rotorcraft), as well as environmental CSs, such as CS-34 (emissions/fuel venting) and CS-36 (noise). AMC provides methods for compliance, while GM offers interpretative guidance. The main process of type certification is similar to that in the US.Footnote 54 EASA also reorganised CS-23, aligning with the revised FAA Part 23.Footnote 55 However, for VTOL aircraft, EASA did not utilise the standards for airplanes or rotorcraft, but formulated special conditions and means of compliance by integrating new elements as VTOL aircraft and elements of rotary-wing aircraft in addition to the requirements of fixed-wing aircraft.Footnote 56
The special condition (SC)-VTOL, while structured similarly to CS-23, contains specific technical requirements tailored to VTOL aircraft. The associated Means of Compliance (MoC) often reference CS-23/25 (fixed-wing) and CS-27/29 (rotorcraft) standards, but are integrated into a single, VTOL-specific framework.Footnote 57
EASA’s development of SC-VTOL involved public consultation and industry collaboration. Despite industry concerns about potential limitations on flexibility and international harmonisation,Footnote 58 EASA maintained that existing standards were inadequate and could stifle innovation in this emerging market.Footnote 59 They viewed VTOL as a novel aircraft category, opening a new market.
Considering these characteristics, while both the US and the EU decompose the regulatory requirements into rotary-wing aircraft (R1) and fixed-wing aircraft (R2) (Figs. 2 and 3), regulatory requirements have been independently established. The most appropriate regulatory requirements based on product characteristics were applied on a case-by-case basis as heterogeneous regulations in the US (Fig. 2), whereas new requirements specialised for VTOL aircraft were formulated as heterogeneous regulations in the EU which embraced new functions and intended use (Fig. 3).
c. Relationship between products and regulations
In the US, the FAA initially agreed with Joby Aviation to apply standards in accordance with Part 23 for Joby Aviation’s product JAS4-1. Later, however, the FAA and Joby Aviation agreed to change the application standards to a special class (Part 21.17 (b)), and the FAA announced airworthiness standards specific to JAS4-1,Footnote 60 composed mainly of the requirements of Part 23; the requirements of Part 33 for engines and Part 35 for propellers were also utilised. In addition, the elements of Parts 27 and 29 for the rotorcraft were incorporated for flight performance, power generation equipment, structure, etc. The FAA also applied Part 21.17 (b) to Archer Aviation’s M001 and published airworthiness standards specific to M001.Footnote 61 The products are recognised as derivatives of fixed-wing aircraft, including rotorcraft elements. Therefore, it was categorised under a special class of small airplanes (Fig. 2, left: VTOL as combination-type) and certified using a customised standards package optimised for each product by combining the requirements of rotary-wing and fixed-wing aircraft according to the product profile (Fig. 2, right: combination regulation).
In the EU, Volocopter’s multi-rotor-type product VoloCity and Lilium’s vectored thrust-type product Jet were recognised as new concepts (fusion products) that cannot be classified as conventional airplanes or rotorcraft (Fig. 3, left: VTOL as fusion-type). Therefore, a unified set of special conditions for small-category VTOLs was designed as the corresponding regulation (Fig. 3, right: fusion regulation) and used for aircraft certification.Footnote 62 Regarding the review system for VTOL aircraft, both the US and the EU have a single organisation for aircraft certification.Footnote 63
2. Roadable aircraft
a. Product characteristics
The mission profile of a roadable aircraft (car and aviation functions) was classified into two categories: driving and flying.Footnote 64 To achieve these two missions with one aircraft, a design considering the sizing, weight, aerodynamics, etc., is required to meet the expected specifications and performance.Footnote 65 The driving function is exerted independently of the flying function and vice versa. Roadable aircraft, exhibiting both road driving and flight functions in a single vehicle, introduced a new means of mobility that enhanced the convenience of transportation; however, each function and its intended use remained within the boundaries of existing markets.Footnote 66
Considering these characteristics, a roadable aircraft can be decomposed into P1, which has the road driving function of a car, and P2, which has the flight moving function of an aircraft, and can be regarded as a combination-type heterogeneous product where these two elements remain independent (Fig. 4). Roadable aircraft are considered both cars and aircraft in the US and the EU.Footnote 67 This interpretation demonstrates that roadable aircraft are regarded as combination-type.
Figure 4. Roadable aircraft.
Note: Each product (or regulatory) element is shown in red or blue.
b. Regulatory characteristics
The US regulatory landscape for roadable aircraft is characterised by dual jurisdiction. The FAA regards them as subject to standard aircraft regulations, due to their purpose of flight.Footnote 68 Conversely, the National Highway Traffic Safety Administration (NHTSA) classifies them as automobiles, subject to automotive regulations. This dual classification stems from the intended use: while designed for flight, their road operation triggers automotive requirements, regardless of the relative proportion of flight versus road use.Footnote 69 Similar to the US, the EU lacks a specific “roadable aircraft” category.
Therefore, roadable aircraft must comply with both automotive and aviation safety and environmental standards in the US and the EU, and there are no standards or processes for reviewing a product as a roadable aircraft. Regarding the aircraft certification standards for roadable aircraft, the standards for small aircraft, small rotary-wing aircraft, or light-sport aircraft, under the jurisdiction of the FAA and EASA, can be applied from the perspective of size restrictions to run on general roads.
From an automotive perspective in the US, roadable aircraft likely fall under “light-duty vehicles” (with a gross vehicle weight rating of 8,500 pounds or less) or “motorcycles” (three-wheeled) classifications, triggering compliance with Federal Motor Vehicle Safety Standards (FMVSS, overseen by NHTSA) and fuel efficiency/emissions standards (49 CFR Parts – NHTSA; and 40 CFR Parts – Environmental Protection Agency (EPA)).Footnote 70
In the EU, for automotive type approval, roadable aircraft are classified under either Category M (passenger transport) or Category L (two-wheel, three-wheel, and certain light quadricycles), depending on their use and vehicle design. Type approval requires compliance with the Regulation (EU) 2018/858, Annex II, which outlines the requirements for vehicle systems, components and separate technical units.Footnote 71
Considering these characteristics, both the US and the EU approach roadable aircraft regulation through a dual framework, requiring compliance with both aviation and automotive standards. There is no unified “roadable aircraft” category in either jurisdiction. The regulatory requirements were perceived to be composed of regulatory requirements for automobile performance (R1) and aircraft performance (R2) in both the US and the EU (Fig. 4). As heterogeneous regulation, each regulatory element was independently applied to each product element.
c. Relationship between products and regulations
The performance and safety standards for automobiles were applied to the product elements of the car, and the performance and safety standards for aircraft were applied to the product elements of the aircraft, each independently.Footnote 72 In the US, Terrafugia’s Transition gained FAA LSA airworthiness in 2021, requiring multiple exemptions from FAA and NHTSA regulations due to its dual-purpose design.Footnote 73 They navigated weight and safety discrepancies through staged applications and approvals. In the EU, AeroMobil pursued CS-23 certification, alongside Category M vehicle approval.Footnote 74 PAL-V, developing a roadable gyroplane, worked with EASA to create a “Special Condition” based on CS-27, addressing both flight and road-related impacts on flight safety.Footnote 75 Road performance itself required separate Category L approval.Footnote 76 As for the review systems, both the US and the EU had a single organisation that oversaw automobile elements and another organisation that oversaw aircraft elements, each independently overseeing each product element of a roadable aircraft.
The analytical results are presented within the framework shown in Fig. 4, in which each regulation of vehicle and aircraft was applied individually to each product element.
V. Discussion
1. Findings
Our study found that the regulatory response to VTOL aircraft varied between the EU and the US due to differing interpretations of product characteristics by the EASA and FAA. The EASA viewed VTOL as a new concept, leading to specific requirements, whereas the FAA created individually optimised regulatory packages using existing categories and regulated them without a clear new classification. This indicates that based on the interpretation of regulatory authorities, the perception of product categories for the same product may vary, and consequently, different regulations may apply. Prior research indicates that product definition influences its regulatory framework, as evidenced by the tobacco industry. Each state in the US has its own unique definition and regulation of electronic cigarettes.Footnote 77 This study noted that identical products can be subjected to different classifications by regulatory authorities, leading to varied regulatory responses, similar to our findings for VTOL aircraft. While globalisation and international bodies promote convergence,Footnote 78 our study underscores the influence of domestic factors, specifically interpretative framing by regulatory agencies.
Whereas the EASA consistently categorised VTOL as a new aircraft category, it was found that during the FAA’s certification process of Joby Aviation’s JAS4-1, the interpretation of the aircraft changed from small airplanes to powered lift-based aircraft, indicating that the interpretation may not always be fixed. This indicates that classification ambiguity can lead to regulatory instability, potentially impacting innovation for emerging technologies, as previously discussed.Footnote 79 The EU’s adoption of the precautionary principle, often leading to more proactive and comprehensive regulation, contrasts with the US’s reliance on cost-benefit analysis, which can result in a more incremental and reactive approach.Footnote 80 These philosophical differences contribute to the observed divergence in VTOL regulation.
Roadable aircraft, interpreted as an independent element-based combination-type heterogeneous product, are regulated separately by each jurisdiction. Products in this category met a mix of regulators but not rules. Because each product element worked independently, it was evaluated individually to ensure the performance and safety of the final product. However, the review of a single product is not unified and materials and data with different requirements and formats had to be submitted to multiple independent review organisations, resulting in a complex review. The review complexity necessitates a well-thought-out development and authorisation application strategy.
2. Theoretical contribution
The regulatory response to heterogeneous products has been addressed practically, but not systematically organised. In this study, directly addressing our research objective to analyse the interplay between product characteristics and regulatory design, by constructing a unique framework linking the characteristics of product components and regulatory packaging, we comprehensively analysed the relationship between heterogeneous products and the corresponding regulations. The methodological approach adopted in this study, a qualitative comparative case studies using our analytical framework, proved instrumental. The framework facilitated an analysis of the interplay between product and regulatory profiles, thereby addressing our research questions. Furthermore, the level of resolution achieved for both product and regulatory profiles was appropriate, successfully capturing the critical elements of product and regulatory profiles to elucidate the key factors that determine the major fate of regulatory design. This not only effectively captured the nuanced regulatory dynamics for heterogeneous products in this instance but also suggests the framework’s potential for effective replication and application to other cases across different technological sectors and legal systems.
Using this framework, the following were elucidated. First, the interpretation of heterogeneous products can be categorised into three types: combination-type with independent elements as seen in roadable aircraft, combination-type with mixed elements (FAA’s VTOL case), and fusion-type (EASA’s VTOL case), with different regulatory approaches. Second, different regulatory packaging methods exist for each type, allowing recognition of the correspondence between product interpretation and regulatory composition in a patterned manner. Finally, the interpretation of the mixing of components by regulatory authorities determines the mixing of the regulatory elements corresponding to the product components. If product interpretation differs, various regulatory packages will be created, even for the same product. This complements existing knowledge regarding the role of national societal and cultural risk tolerance in regulatory design,Footnote 81 offering deeper insights into the micro-foundations of regulatory divergence,Footnote 82 particularly the role of product interpretation by a regulatory agency as a distinct variable.
Regulators determine the interaction between product profile and regulation in heterogeneous products. The regulatory design can be generalised as “a regulator-dependent product interpretation and regulation-mixture model” (Fig. 5). The patterning is as follows. When a new heterogeneous product is considered an independent element type, the review criteria and regulatory authorities are also independent between elements, and the approach involves individually addressing multiple regulations. For combination-type with mixed elements, the approach involves combining the existing regulatory elements corresponding to the product elements. In the combination of regulatory elements, the primary regulatory element is determined and other complementary elements are added. When a new heterogeneous product is seen as a fusion-type, a new fusion-type regulation should be designed by incorporating the respective regulatory elements to encompass a new function and intended use. This model provides a theoretical structure for understanding the interplay between heterogeneous product composition and regulatory design.
Figure 5. Regulator-dependent product interpretation and regulation-mixture model.
Note: The vertical axis shows the types of heterogeneous products, while the horizontal axis represents the types of heterogeneous regulations and number of review organisations.
3. Practical implications
As regulations differ according to heterogeneous product type, it is important to clearly distinguish between product types when designing regulations. This clarification must provide the necessary information for regulatory design and offer developers a clear direction. The US FDA’s approach to determining product categories based on the primary function for combination products is a useful methodology in other industries and may be beneficial for the regulation of heterogeneous products. This involves classifying products requiring multiagency coordination by identifying the primary function and then applying regulations according to this classification.
When heterogeneous products require review by multiple regulatory authorities, as in the case of roadable aircraft, developers must arrange for a mix of multiple regulatory authorities. As the complexity of the product components increases, the difficulty and limitations of such arrangements by developers also increase. Therefore, there is a need for a government organisation that functions as a control tower to understand the interpretation of heterogeneous products by multiple regulatory authorities and address the regulatory challenges. This point was also proposed under the pro-innovation regulatory initiative in the UK.Footnote 83 The US FDA established the Office of Combination Products to determine the primary function for heterogeneous products. The government needs to establish a function to interpret heterogeneous products and identify responsible regulatory authorities, while efficiently profiling the correspondence between products and regulations. The framework developed in this study can be used for systematic product classification and the clarification of regulatory designs. Additionally, this framework can guide regulatory design in regulatory sandboxes, where the coordination of multiple agencies and regulations is black-boxed.
Given the difficulty of changing regulations without reframing the interpretation of product types, this study also suggests that for the international harmonisation of regulations, discussions among countries need to revisit the interpretation of product types. Alternatively, as partial convergence between the FAA and the EASA has begun,Footnote 84 auxiliary measures to reconcile disparities among the relevant parties may be necessary. This product classification-based approach clarifies the development/regulatory paths for heterogeneous products that require cross-disciplinary and cross-border considerations. These implications contribute to a better understanding of key principles for improving future frameworks.
This study is circumscribed by its focus on a limited number of mobility industry case studies, employing a simplified framework predicated on two primary product elements which may not fully capture the complexities of future products; a product-centric analysis that neglects the increasingly pertinent service dimension; and an investigation of pre-launch products, lacking a post-launch impact assessment. Future research should consider a wider range of case studies, incorporate service-related aspects, and examine long-term impacts.
VI. Conclusion
This study aimed to analyse how heterogeneous product characteristics influence regulatory frameworks and to identify key principles for effective regulation of such products. To analyse the interplay between product characteristics and regulatory design, we constructed a framework to interpret the product profile, elements of the corresponding regulations, and relationships. Applying this framework to VTOL and roadable aircraft, we found that applicable regulations differed according to heterogeneous product type, suggesting that product interpretation determines regulatory design. Our findings provide an understanding of the interplay between product characteristics and regulatory design. The findings indicate that it is critical to examine the classification of products and corresponding regulations together, rather than individually elucidating either of these matters when designing a new product or regulation. This directly addresses our research questions by demonstrating that product characteristics, as interpreted by regulators, fundamentally shape the ensuing regulatory framework, and that a key principle for effective regulation is the concurrent and coherent consideration of product classification and regulatory design. This research provides actionable insights and a robust, theoretically grounded framework, informing the development of more adaptable and harmonised regulatory strategies in an era of technological convergence. It also contributes to the literature on regulatory convergence and divergence by highlighting the crucial role of interpretative framing by regulatory agencies, alongside established factors like institutional structures and regulatory philosophies.
Funding
This work was funded by the Research Institute of Science and Technology for Society (RISTEX), Japan Science and Technology Agency (JST), under grant number JPMJRX17B2.
Open access
