New Paper: Towards a Process Theory of Entrepreneurial Ecosystems

I'm happy to announce that my latest paper with Richard Harrison on entrepreneurial ecosystems will be published in the Strategic Entrepreneurship Journal's special issue on entrepreneurial ecosystems. You can read a pre-print version of the paper here. Below is the abstract, but after that I'll tell you about the really cool stuff in the paper. 


Entrepreneurial ecosystems have emerged as a popular concept within entrepreneurship policy and practitioner communities. Specifically, they are seen as a regional economic development strategy based around creating supportive environments that foster innovative startups. However, existing research on entrepreneurial ecosystems has been largely typological and atheoretical and has not yet explored how they influence the entrepreneurship process. This paper critically examines the relationships between ecosystems and other existing bodies of work such as clusters and regional innovation systems. Drawing on this background, the paper suggests that a process-based view of ecosystems provides a better framework to understand their role in supporting new venture creation. This framework is used to explain the evolution and transformation of entrepreneurial ecosystems and to create a typology of different ecosystem structures. 

I wrote this paper to make two main points. First, ecosystems aren't things. You can't touch them, you can't smell them, you can't taste them. It's hard to say at which point an ecosystem exists and when one doesn't. We argue that it's better to think of ecosystems as on-going processes of knowledge creation, sharing, and firm birth and growth. We shouldn't be concerned with what an ecosystem looks like, but rather how resources, people, and knowledge flow and recycle within an ecosystem over time. There is a continual flow within ecosystems and they themselves are constantly evolving in response to internal changes and external forces. 

Ecosystem ebbs and flows


Second, in the paper we argue that when we look at ecosystems, what we really need to focus in on are the resources in the ecosystem that help the creation and growth of innovative new ventures. These resources might be very different from those we've previously focused on. For instance, very few innovative start-ups really need cutting edge technical knowledge from universities. So, university research isn't a key resource for them. What they need is really smart people — that's the resource universities produce that is most important for them. 

But more important than technical knowledge is entrepreneurial knowledge, knowledge about the entrepreneurship process itself. Entrepreneurs learn this from other entrepreneurs through observation and by chatting with each other. This knowledge is a critical resource for an ecosystem. Other important entrepreneurial resources include traditional things like risk capital, skilled workers, market opportunities, and the rest. 

But resources by themselves do very little: entrepreneurs have to be able to access them! This is why networks are important — entrepreneurial resources are often held within social networks. In places with dense networks and lots of trust, entrepreneurs can easily access those resources. In places with sparse networks and little trust, it doesn't matter what resources are there, it'll be too hard to actually get them when they need them. 

This means that we can judge different ecosystems based on their stocks of entrepreneurial resources and the strengths of the local networks to access those. Places can have a lot of entrepreneurial resources but not have a lot of trust and poor networks, meaning that if the resources ever run out (like say the case of an oil and gas economy like Calgary) they're in for a bad time. And there are places like St. John's in Newfoundland that might not have a whole lot of resources, but they have very strong local networks that help make up for it. This means we can make a nice 2x2 chart of different types of ecosystems: 

Ecosystem Matrix