The Dynamics of Entrepreneurial Ecosystems

Allan O'Connor, Colin Mason, Morgan P. Miles, David Audretsch, Allan O’Connor, Colin Mason, Morgan P. Miles, David Audretsch

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000535938
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

This book aims to provide new approaches to analysing and thinking about how entrepreneurial ecosystems develop and evolve over time as well as shed light on the relatively unexplored area of entrepreneurship ecosystem dynamics.

The concept of entrepreneurial ecosystems has emerged as a framework to understand the nature of places in which entrepreneurial activity flourishes. Time is fundamental to the analysis of the dynamics of an entrepreneurial ecosystem. New firm creation, survival, growth and demise all occur within a temporal context that is, over and within time. Systems approaches to research invariably model the influential effects of the actors and elements that shape, re-shape, maintain, shift and change the system itself. An entrepreneurial ecosystem point of view, therefore, is inherently time-dependent and provides an analytical framework that reveals how the number and diversity of entrepreneurial actors situated in a place and time influence the creation of new firms, their survival, growth, and ultimately the stability of markets and industry in a time and place. Whether for better or worse, the historic and present time dimensions underpin the functioning and trajectory of entrepreneurial ecosystem performances and how they are shaped over time.

Each chapter in this edited volume outlines a particular perspective and/or a unique case drawn from a range of countries that collectively reveal the dynamics of an ever-changing entrepreneurial ecosystem.

The chapters were originally published as a special issue of the journal, Entrepreneurship and Regional Development.

Time and the dynamics of entrepreneurial ecosystems

David Audretsch, Colin Mason, Morgan P. Miles and Allan O’Connor

ABSTRACTIn this article, we are primarily concerned with the influence and role of time on an entrepreneurial ecosystem (EE). Hence, the dynamics incorporated into the conception of the EE comes into focus. The recent work on this aspect has generally observed time as an evolutionary element for shaping and forming the context for entrepreneurial outcomes or that time is related to the change in entrepreneur and network profiles within a region. Other scholars have also noted how certain aspects of an EE will be affected by dimensions of size over time or that the profile of resources will alter the EE attractiveness for entrepreneurs. Time itself as a dynamic influence has not been explicitly examined and here we seek to draw out the multiple perceptions of time that influence the different rates of start-up, firm growth, change and evolution. We conclude by drawing attention to the simultaneous interaction of the different perceptions of time and outline the contributions to this Special Issue on the dynamics of the entrepreneurial ecosystem.

The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers’ goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates.

Schumpeter 1942, 72-73

Introduction

Building on the ecological concepts formulated by organizational theorists (see Hannan and Freeman 1977), the entrepreneurial ecosystem (EE) concept has been gaining prominence since at least the early nineteen-nineties. While the term EE is still considered relatively new (Spigel 2017; Shepherd 2015), the concept of an ecosystem is anything but novel. The economist Joseph Schumpeter, as quoted above, in building his case for the waves of change known as creative destruction, implicitly connects the enterprise to the dynamics among levels of analysis that produce new forms of industrial organization acting as a fuel for the capitalist engine.

One of the earliest and more explicit references to an ecological perspective of entrepreneurship can be found with Aldrich (1990), who, in an interdisciplinary forum, offered the ecological perspective as an alternate way to consider the ‘rates’ of business founding occurring within a given environment. When borrowed, adapted, and applied to entrepreneurship, Aldrich argued that an ecological conception of entrepreneurship, when viewed as business founding, gave focus to the dynamics, the ability to account for differing scales of social interactions, and the potential to produce new and interesting hypotheses. Since then, an increasing number of works have examined and categorized the contexts for entrepreneurship that span organizational, institutional, industrial, social, and regional forms of definition (Autio et al. 2014).

One of the glaring limitations of the extant literature is that entrepreneurial ecosystems have generally been analysed from a static perspective (Stam and van de Ven 2019; Bhawe and Zahra 2019). While a plethora of important insights have been garnered about the structure and interactions characterizing entrepreneurial ecosystems, little is known about how they develop and evolve over time. The purpose of this special issue is to address this striking gap in the literature by focusing on the dynamics of entrepreneurial ecosystems. The concept of entrepreneurial ecosystems (EEs) has emerged in recent years as a framework to understand the nature of places in which entrepreneurial activity flourishes. Spigel (2017, 50) defines entrepreneurial ecosystems as follows: ‘combinations of social, political, economic, and cultural elements within a region that support the development and growth of innovative start-ups and encourage nascent entrepreneurs and other actors to take the risks of starting, funding, and otherwise assisting high-risk ventures’.

However, the existing literature has several shortcomings. Despite some progress (Acs et al. 2017b), the concept is under-theorized. While it is evident that the entrepreneur is central to an EE perspective, it remains unclear how entrepreneurial ecosystems bring about distinctive performances over time from other concepts that seek to explain the geographical concentration of entrepreneurial activity (e.g. clusters, learning regions, regional innovation systems). Much of the literature comprises ‘superficial generalisations … rather than rigorous social science research’ (Stam and Spigel 2017, 408). Specifically, empirical studies are static rather than dynamic which does not capture the genesis and evolution of EEs (Mason and Brown 2014; Mack and Mayer 2016; Alvedalen and Boschma 2017). There is little consideration of the context in which entrepreneurial ecosystems emerge (Mack and Meyer 2016). The network of interactions of individual elements in the EEs has not been sufficiently explored (Motoyama and Watkins 2014). And the causal mechanisms are weak: it is not clear how the various elements in entrepreneurial ecosystems enhance entrepreneurship (Alvedalen and Boschma 2017; Stam and Spigel 2017).

In this special issue, we are primarily concerned with the dynamics of EEs, and therefore it follows that we need to take into account the influence and role of time. The recent work on this aspect has generally treated time as an evolutionary element for shaping and forming the EE (Autio et al. 2018). For instance, Thompson, Purdy, and Ventresca (2018) articulate the time-dependent pattern of ecosystem formation. Others have suggested that time is related to the change in entrepreneur and network profiles within a region, although the dynamics as such have not been explicitly examined (Cowell 2018). Some scholars have also noted how EEs are affected over time by increases in degrees of such things as intentions, coherence, and resources (Roundy, Bradshaw, and Brockman 2018). Furthermore, over time the changing sources and profile of resources (e.g., entrepreneurial knowledge, financial capital, mentors, etc.) will also alter the EE attractiveness for entrepreneurs (Mason, Cooper, and Harrison 2002; Spigel and Harrison 2018). Apart from the explicit reference to evolution of the EE, these various observations about time have not particularly examined and contextualized the specific effect of time as it intersects with the various levels of analysis.

Entrepreneurship is a multi-level phenomenon, and the EE can be considered as a composite construct that fits within an eclectic paradigm of entrepreneurship reflecting theories of behaviour, organization, and performance (Audretsch, Kuratko, and Link 2015). Through the behavioural lens, actors, being individuals with motivations and traits, and organizations with cultures and intent, each play a role in shaping the nature of the EE from the inside. Organizational theories of people, teams, and firms provide the relational and interactional understandings between these actors and how they transact entrepreneurship. To this we can add the institutional setting (Denzau and North 1994; North 1990; Scott 1987) that comprises the political, social, and legal formal and informal ‘rules’ that contribute to new venture creation, opportunity, support and legitimacy, shaping and influencing the mental models of actors (Lim et al. 2010). The organization does not occur isolated from the institutional settings found in places or contexts. Performance theories can only be exhibited over time through the objective outcomes of entrepreneurs and firms, typically measured as new firm formations, firm growth and/or innovation, and socio-economic contribution (Audretsch, Kuratko, and Link 2015). While multi-level understanding and methods of analysis are needed, we argue that an EE is not only a multi-level phenomenon but also a multi-temporal one whereby the levels themselves are subject to different perceptions of time horizons; historic, present and future. In contrast to the extant literature, we invited authors to examine more particularly the dynamics of the EE as it is influenced by time.

The extant EE literature tends to assume that time hosts entrepreneurial activity by actors. We adopt an alternate view, that time is an instrument of entrepreneurial actors and their activity that, over time, evolves the ecosystem. This alternate concept accepts that entrepreneurial activity is in the hands of entrepreneurial actors be they at micro, macro or meso levels. In this framing, time is a concept that works for and/or potentially against the entrepreneurial actor. The entrepreneurial actor will be both influenced by and influence time in the past, present and future. Time for the ecosystem is established by the pace of the actors rather than the pace of the ecosystem determining the time for entrepreneurial activity. The ecosystem is conceptually inert but representational of the actors and activities that give it life and dynamics. The EE does not have volution or action, but the actors have both, and the pace of their interactions determines the profile, the intensity, the rate of output, and, ultimately, the outcomes of the EE.

This is a major departure from previous conceptions of the EE, whereby the focus of an EE study has been on how the EE stimulates additional entrepreneurial activity. We suggest instead that entrepreneurial activity is the driver of the ecosystem, and this conception is consistent with Schumpeter’s original framing of economic development (Schumpeter 1942). This does not debase the idea that entrepreneurial activity is important, but it places the outcomes of EE in the hands of the entrepreneurial actors and their interactivity (Harrison, Cooper, and Mason 2004). By default, actors are inside the ecosystem, and the entrepreneurial activity is not dependent on the ecosystem, but the EE is a framing of interdependent entrepreneurial activity. This conceptualization is consistent with the earlier views proposed by Van de Ven (1993, 211–212), who argued that individual entrepreneurs ‘construct and change the industrial infrastructure’ and that ‘infrastructure does not emerge and change all at once by the actions of one or even a few key entrepreneurs. Instead, it emerges through the accretion of numerous institutional, resource, and proprietary events that co-produce each other over an extended period’. Entrepreneurship observed through the lens of an EE is not just about new firm creation, but holistically it is about the disruption and change of the ecosystem, and the primary concern is how actors may vary the pattern of interaction to alter the entrepreneurial outcomes.

The remainder of this paper includes the following sections. The next section undertakes a brief definitional analysis to make apparent the consistencies and contrasts that exist within various versions of the EE definition. This is followed by an exploration of related ecosystem concepts to draw out the distinctive attributes of the EE viewpoint. A discussion then ensues to articulate various approaches to defining what might be in or out of the analysis of the EE. It is proposed that temporal boundaries need to define the levels of analysis of the EE. We then present a conclusion that suggests EE research has strong relevance to ‘how’ and ‘why’ questions of entrepreneurship as they are relevant to place and time. In this way EE research is a tool of analysis rather than a field of research. When used as a tool, the variation of entrepreneurial dynamics comes into focus revealing the heterogeneity rath...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Citation Information
• Notes on Contributors
• 1 Time and the dynamics of entrepreneurial ecosystems
• 2 From orchards to chips: Silicon Valley’s evolving entrepreneurial ecosystem
• 3 The role of MNEs in the genesis and growth of a resilient entrepreneurial ecosystem
• 4 Meeting its Waterloo? Recycling in entrepreneurial ecosystems after anchor firm collapse
• 5 Degrees of integration: how a fragmented entrepreneurial ecosystem promotes different types of entrepreneurs
• 6 The injection of resources by transnational entrepreneurs: towards a model of the early evolution of an entrepreneurial ecosystem
• 7 Unhelpful help: The state of support programmes and the dynamics of entrepreneurship ecosystems in Ethiopia
• Index