SMART REGULATION FOR ENTREPRENEURSHIP IN THE DIGITAL ECONOMY: THE EU EXPERIENCE

Abstract

Purpose of the article. The aim of this research is to conceptualize the theoretical, methodological, and practical foundations of smart regulation of business development within the context of the digital transformation of the economy, drawing on the advanced experiences of the European Union. The study seeks to substantiate the transition from rigid, reactive regulatory frameworks to adaptive, data-centric, and platform-driven mechanisms capable of stimulating entrepreneurial initiative, fostering digital innovation, and ensuring market safety and digital fairness across various EU member states. Research methodology. The methodology is grounded in a systemic, comparative, and institutional analytical approach. The theoretical framework synthesizes mission-oriented governance, agile regulatory approaches, and digital governance theories. Comparative analysis was employed to examine the institutional models of smart regulation across four representative EU nations (Estonia, Germany, Denmark, and Spain). The study uses qualitative synthesis, institutional mapping, and empirical categorization of regulatory tools, including Regulatory Sandboxes, RegTech/SupTech implementations, and digital platform integration, to extract strategic implications for emerging market economies. Results. The study demonstrates that smart regulation in the EU represents an evolutionary paradigm shift rather than mere deregulation. It balances economic efficiency with digital fairness through landmark frameworks such as the Digital Markets Act, Digital Services Act, and AI Act. Four distinct national models of smart regulation were identified and systematized: Estonia’s integrated "Digital-First" model based on automated governance and zero bureaucracy; Germany’s structured framework focusing on industrial IoT (Mittelstand 4.0) and stringent data protection; Denmark’s Scandinavian model combining green twin transitions with open-data transparency; and Spain’s experimental model leveraging AI regulatory sandboxes and startup-support legislation. The findings confirm that effective regulatory environment relies on data interoperability, real-time compliance monitoring, and safe experimental regimes. Practical implications. The practical significance lies in providing actionable policy recommendations for developing and transition economies, particularly those aiming for EU integration. The study outlines specific pathways for institutional adaptation: expanding AI and fintech regulatory sandboxes, implementing the "Once-Only Principle" via national interoperability platforms (similar to Estonia's X-Road or Ukraine's Trembita), and adopting Digital Regulatory Impact Assessments (Digital RIA) to prevent bureaucratic barriers for small and medium-sized enterprises (SMEs). Value/Originality. The paper contributes to the academic discourse by offering a comprehensive comparative taxonomy of smart regulation strategies within the EU. It bridges the theoretical gap between innovation economics and digital regulatory design, offering a novel synthesis of how adaptive state mechanisms, RegTech solutions, and experimental legal regimes can co-exist to maximize entrepreneurial resilience in the era of artificial intelligence and platform economics.