From Idea to Impact

“Americans innovate while Europeans regulate.” This old trope misses a fundamental point. Both peoples are actually powerhouses of innovation. But it is their respective fundamental societal beliefs in individual and government responsibility that steer their creative energies in different paths.

For the United States, the first 10 amendments to the country’s constitution are structured around “negative” rights. They prohibit the government from acting in certain ways towards citizens to protect them from overreach. The First Amendment, for example, states that:

“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

This “charter of negative liberties” lays the foundation for American skepticism about government's capacity to deliver collective solutions, thereby prioritizing the agency of the individual. U.S. institutions have consequently been built to leave innovation to the private sector.

Europe's approach, in contrast, is rooted in “positive” rights. The Treaty of Rome and the Treaty of Lisbon codify what government should provide for citizens, as does the EU’s founding charter, the Maastricht Treaty. Italian Finance Minister Guido Carli claimed at the agreement’s signing that it established a “new pact between states and citizens”. Its emphasis on positive rights laid the foundation for institutions that shape and coordinate collective outcomes but discourage risk-taking by individuals.

Entrepreneurial dynamism is the centerpiece of the U.S. economic approach; government enables commercial breakthroughs from the sidelines. The EU focuses instead on government frameworks, with entrepreneurs following their lead. The difference manifests itself in multiple ways in the American and European innovation ecosystems, yet both structures create gaps between industrial accomplishments and governmental support. To capture both, the transatlantic community can build stronger links between these ecosystems and government institutions without sacrificing core societal beliefs.

The American Challenge: A Government Two Steps Behind

During the COVID-19 pandemic, the world's first mRNA vaccine came not from government but from a researcher whom the U.S. public sector had repeatedly rejected. Dr. Katalin Karikó struggled for years to secure sustained funding from the National Institutes of Health and recognition from the U.S. public research network for her work on mRNA technology. Since major granting institutions deemed her research “not interesting enough”, she entered the private sector by joining BioNTech, which subsequently partnered with Pfizer on developing the technology. Pfizer initially formulated its mRNA vaccine without public funding from the U.S. government’s Operation Warp Speed, but the company did receive substantial U.S. government support once the vaccine’s efficacy became clear. This episode illustrates a critical blind spot in Washington. By yielding leadership of high-risk research to the private sector, the U.S. government can miss early opportunities for public investment that can accelerate breakthrough technologies at critical times.

Operation Warp Speed eventually also delivered a vaccine, but Karikó’s story reflects deep structural problems rooted in American institutional skepticism of government’s role in innovation. Its traditional procurement processes, for example, can take up to seven times as long as a commercial technology cycle, leading to what many consider the "valley of death" problem: acquisition timelines that are mismatched with the pace of innovation. This delay prohibits many promising small companies from advancing from research grants to procurement contracts, since the defense acquisition system is slow, risk-averse, and optimized for legacy contractors and multi-year hardware buys rather than the fast, iterative cycles of tech startups. As a result, institutional biases systematically favor established players, who have the resources to lobby and navigate the government bureaucracy that controls the contracting process. Such a structure solidifies a system that has led to Washington’s overreliance on larger corporations with which it regularly does business. Commerce Secretary Howard Lutnick acknowledged this situation when he recently noted that Lockheed Martin, one of the biggest U.S. defense companies, was "basically an arm of the U.S. government". And by losing out on the smaller companies’ know-how, government remains ignorant of solutions to problems that it must address.

The European Approach: Regulated Innovation

Europe's institutional confidence in government coordination creates different but equally challenging constraints. The continent’s “positive rights” framework produces government that attempts to coordinate collective outcomes while creating tiered levels of regulation that hinder business activity and stifle innovation.

In 2024, the EU’s proposed Supply Chain Law aimed to bolster human rights and quality of life by combating child labor and illegal deforestation. Both are a public good, but the well-intentioned legislation would have constrained innovation by imposing strict due diligence and transparency requirements across entire supply chains. This presented a problem, particularly for small- and medium-sized enterprises (SMEs) that lack the resources to manage complex compliance burdens. A poll conducted during the legislation's proposal phase showed that 59% of German SMEs claimed the law would negatively impact their businesses. Almost a quarter (24%) were considering relocation outside the EU to more business-friendly environments, a striking indication that regulation of this scale would impede innovation at home. Extensive administrative burdens affect more than production costs; they decrease entrepreneurial risk-taking.

The lessons that can be learned from this are especially timely as Europe seeks to attract U.S. tech talent and researchers, many of whom are disillusioned by Washington’s funding cuts and political interference. Pervasive bureaucracy and a fragmented regulatory landscape, however, present significant hurdles for Europe-bound innovators. The European Research Council has ramped up relocation grants and visa facilitation, but many U.S. scientists and startups remain cautious, balancing the opportunity to work within Europe’s values-driven innovation environment with slower market dynamics and regulatory friction. The EU is facing a key moment at which it can make headway in the race for global talent by narrowing the innovation gap with the United States—if it can erode structural and regulatory complexity.

The Symbiotic Future: Pragmatic Regulation with Unconstrained Innovation

Current global challenges require technological breakthroughs, pragmatic regulation and systematic implementation, all of which would benefit from U.S.-EU cooperation. The future belongs to governments and industries that can master innovation and deployment together. Both sides of the Atlantic, fortunately, are experimenting with solutions that are worthy of pursuing.

In the United States, the solution could include expanding "Front Door" models that the Defense Innovation Unit and U.S. Space Force have championed. These models help agencies access breakthrough technologies from nontraditional sources, thereby distinguishing genuine innovation from hype and closing the gaps between industry and government. The recent elevation of the Office of Space Commerce (OSC) exemplifies this approach. President Donald Trump issued in August an executive order that moved the OSC from its previous position within the National Oceanic and Atmospheric Administration (NOAA) to report directly to the Commerce Secretary's office, creating a dedicated advocate for commercial space innovation at the highest level while streamlining licensing and permitting processes that had created barriers for smaller space companies. The move represents precisely the kind of institutional innovation that the United States needs to enable government capacity to support entrepreneurial risk-taking. It gives industry access to the appropriate officials for information that can advance innovation. Yet it does so in a distinctly American form: Government enables risk-taking while keeping the market in the lead.

Across the Atlantic, EU Inc started in 2024 as a grassroots initiative, supportive of the "28th regime" striving to create a single pan-European legal framework for startups. Its idea, in part, is that one central EU-level registry, standardized investment documents and EU-wide stock options would eliminate the need for European entrepreneurs "to be unfairly lucky to be successful in creating large companies in Europe" due to more than 27 legal systems that fragment the continent’s market. The EU Commission, through a working group that Commission President Ursula von der Leyen established this past January to help startups and scaleups, is soliciting feedback on establishing a “28th regime” through September. If EU Inc’s proposal is successful, it could reshape Europe’s innovation landscape by reducing structural barriers to innovation in a distinctly European form: Governments create common frameworks to unlock market potential.

Building Transatlantic Innovation Synergies

For current transatlantic cooperation to tackle the innovation challenge, “business” seems to be the magic word. Establishing regular convenings that bring together key innovation leaders from government and industry would be a critical step forward. Their meetings should focus on knowledge exchange and build on existing initiatives such as the Choose France Summits or the U.S. Office of Space Commerce’s recent request for feedback on the EU Space Act.

The two sides should learn from each other’s proposals and best practices through consistent engagement, but they should not simply duplicate efforts. The path forward requires recognizing that the United States and Europe need to become complementary but not the same. Each side's greatest challenge is the other's natural solution. The United States could benefit from Europe's systematic approach to collective action, while Europe could benefit from market-driven American frameworks. By turning their differences into mutual assets, Washington and Brussels can build a shared innovative future.

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