Contested Rule Formation Under Institutional Mismatch: A Framework for Early‐Phase Governance of Disruptive Innovations

ABSTRACT

Disruptive innovations often diffuse faster than inherited policy institutions can classify, assign jurisdiction, and govern them. In these early phases, the central struggle is often not yet about the stringency of substantive standards, but about prior questions of what the innovation is (its legal and administrative classification), who is competent to decide (allocation of jurisdiction and decision authority), and where authoritative decisions should be made (designation of legitimate governance venues). This article develops Contested Rule Formation (CRF), a meso‐level, four‐stage framework for analyzing early‐phase governance under institutional mismatch in institutionally dense settings. CRF reconceptualizes institutional voids as localized misfit along five co‐evolving dimensions: recognition, authority, enforcement capacity, venue clarity, and interpretive frames. It then specifies a staged mechanism (incipient recognition, exploratory tactics, rule crystallization, and consolidation/backlash) in which classification and jurisdictional settlements function as rate‐limiting gates for durable rulemaking and for procedural learning, understood as a contingent trajectory rather than an automatic result of contestation. A proof‐of‐concept comparison of ride‐hailing governance in California and Austin/Texas shows how different category‐and‐venue pathways shaped early outcomes. The article closes with a diagnostic and comparative research agenda for studying upstream governance across AI, fintech, energy, and other domains of disruptive innovation and socio‐technical change.