The underlying rationale of Entrepreneurial Ecosystems (EE) interactions are essentially attached to geographical space. Resources, institutions and agents that affect entrepreneurial events and processes are intrinsically embedded in territories. However, we still fall short in systematizing elements associated with the spatiality of entrepreneurial ecosystems, i.e., their geographical reach and, importantly, the existence of transregional linkages between ecosystems. So far, we remain largely attached to a shortsighted notion of EE as ‘insular’ systems rather than spatially flexible structures and networks. A quick glimpse at popular sources – such as Startup Genome, StartupBlink – creates the idea that cities by themselves can be defined as entrepreneurial ecosystems.
Defying the insular notion of Entrepreneurial Ecosystems
The notion of EE as territorially-bounded structures should be challenged. Beyond a theoretical discussion on EE spatial linkages, such conditions encompass structural implications for EE configurations, i.e., the nature of influential components and their respective interactions vis-à-vis the intensity and characteristics of entrepreneurial activity in places. Without a systematic attention to the spatiality of EE, a clear comprehension of its underlying mechanisms becomes significantly compromised.
By approaching two ecosystems – Bangalore and Tokyo – based on the inflow of venture capital (VC) over the last three decades, we could identify variegated spatial patterns of VC inflows across the analyzed cases. The observed temporal trends do not suggest the existence of homogeneous patterns of exogenous connections. Plus, these EE differ with regard to their orientation to ‘build’ or ‘capture’ VC from various geographical settings. Ultimately, this means that their geographical structures are heterogeneously embedded in geographical space – and such embeddedness evolves along different trajectories.
Why does the spatiality of Entrepreneurial Ecosystems matter?
VC flows can be a valuable source of information on the spatiality and evolution of EE because it comprehends properties that go beyond its intrinsic association with entrepreneurial finance. Of course, financial capital by itself is one of the key elements in entrepreneurial ecosystems. It allows entrepreneurs and ventures to access the monetary resources needed to invest in their operations (and expansion thereof). But more than that, VC facilitates access and embeddedness in networks, since it is in investors’ best interests to engage entrepreneurs in relationships with other relevant players to help growing their businesses. From this, it is reasonable to expect that the geographical origin of venture capitalists will affect the spatial topology of the linkages in which their investees are involved. Second, VC funds bring ‘smart-money’ to the ecosystem, i.e., they provide entrepreneurial firms with market capabilities associated to the provision of human and intellectual capital. Third, VC affects the cultural dimension in EE by shaping how entrepreneurial narratives and ambitions should look like.
The spatiality of Entrepreneurial Ecosystems and their dynamics
For these reasons, it is reasonable to assume that the spatial topology of VC flowing into any given EE can give important insights into their configurations. By that we mean the relevant agents, institutions and geography of linkages that shape the contextual conditions leading up to entrepreneurial activity. Even though scholars and policymakers – sometimes – recognize the inflow of exogenous assets such as VC, it takes its origins as ‘neutral’ vis-à-vis the dynamics of EE. This, we believe, is a major shortcoming of EE literature, policy and practice. This entails a significant change in our territorial view of EE. Although our focus has been on VC flows, an element that transcends the financial dimension, it is time to devote systematic attention to migration (human capital dimension), connections with universities (knowledge dimension), accelerators (support intermediaries’ dimension), local leadership exerted by multinationals (leadership dimension), born global ventures (demand dimension), and so on. Ultimately, such perspectives lead to a whole different notion about how EE operate. Nurturing strategies for Entrepreneurial Ecosystems need to acknowledge these features and incorporate them in their actions and initiatives.
Read the full paper here to find out more: https://www.sciencedirect.com/science/article/abs/pii/S2352673424000301
Author bio
Bruno Fischer is an Associate Professor of Strategy and Entrepreneurship at the University of Campinas, School of Applied Sciences, Brazil. He received his PhD in Economics of Innovation from the Complutense University of Madrid, Spain. His research is oriented to the topic of entrepreneurial ecosystems and their respective configurations.
Susann Schäfer is a researcher at the Chair of Economic Geography at the Friedrich Schiller University Jena. She obtained her PhD from the University of Bayreuth, Germany. She is currently interested in climate change adaptation, entrepreneurial ecosystems and digitalisation of social infrastructure.
Paola Rücker Schaeffer currently works as an Assistant Professor at the Unisinos Business School, Brazil. She is also Innovation Director at the State Department for Innovation, Science and Technology of Rio Grande do Sul, Brazil. She received her PhD from the University of Campinas, Department of Science and Technology Policy, Brazil. Her current research interests encompass knowledge-intensive entrepreneurship and entrepreneurial ecosystems.
Alsones Balestrin is a founder at the Startup Academy Business School in Porto Alegre, Brazil. He has been involved with academic and policy debates on entrepreneurship and innovation, bridging existing chasms between universities, government and society in this respect. He obtained his PhD from Université de Poitiers, France. His current research is dedicated to disruptive entrepreneurship, entrepreneurial education and policy for entrepreneurial ecosystems.
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