Privacy and Innovation: From Disruption to Opportunities

In this chapter I present an approach of privacy from the perspective of innovation theory. I bring two conceptual approaches together. First, I disentangle privacy in three interconnected concepts: information security, data protection and the private sphere. Each of these concepts has its own dynamics and refers to a specific logic: technology in case of information security, regulation in case of data protection and society in case of the private sphere. By interconnecting them, a more nuanced perspective on the innovative incentives stemming from privacy considerations arises. Second, innovation is considered to be hampered by market and system imperfections. These imperfections reduce the efficiency of the innovation system. Analysing which imperfections exist helps in overcoming them by identifying adequate counter-strategies. I will use a policy study that has been performed for the Dutch Ministry of Economic Affairs to elaborate the relation between privacy and innovation in more detail. The resulting tone is optimistic: during the study several indications for a more privacy respecting approach by firms were found. Still, the challenges to be addressed are huge.