Regional capability emergence in an entrepreneurial ecosystem
| Pages | 359-383 |
| Date | 02 September 2019 |
| Published date | 02 September 2019 |
| DOI | https://doi.org/10.1108/JEPP-04-2019-0030 |
| Author | Kevin Walsh |
| Subject Matter | Strategy,Entrepreneurship,Business climate/policy |
Regional capability emergence in
an entrepreneurial ecosystem
Kevin Walsh
University College Dublin, Dublin, Ireland
Abstract
Purpose –Entrepreneurial ecosystems offer an approach to analyse the evolution and resilience of a region
by placing the emphasis on the interactions that occur between entrepreneurs and the supporting regional
resources. The purpose of this paper is to analyse the transformation of a region with high-growth firms to
identify the coordinating structures that evolve in response to entrepreneurial recycling of resources.
Design/methodology/approach –This study uses network analysis to explore the scaling capability
network of leaders in Dublin’s high-growth IT firms over a 15-year period.
Findings –After a gestation period of 10 years, leaders displayed prior experience from an initial entrant.
Towards the end of the study period, numerous well-connected internet firms arose providing a structure
resilient to exogenous and endogenous shocks.
Research limitations/implications –The findings suggest that the region’s structure changed from a
satellite platform to a “hub and spoke”type district, and is showing signs of becoming a Marshallian type
district, although the analysis is limited to regional knowledge capital through leadership mobility and does
not consider the financial, social or institutional capital described in the entrepreneurial ecosystems literature.
Practical implications –Policy that aims to create regional resilience but minimise the scope of
intervention needed can encourage the introduction of an anchor firm to a region and can complement this
initiative with regional capability accumulation through labour policies that encourage resource recycling
and minimise human capital leakage.
Originality/value –This contributes to an understanding of how entrepreneurial ecosystems evolveand the
structure of the supporting resources that lead to increased regional resilience.
Keywords Prior experience, Life cycle, Entrepreneurial ecosystems
Paper type Research paper
1. Introduction
The entrepreneurial ecosystems perspective offers a lens to view regional development that
has its roots in regional development and strategy literature, although it offers the
opportunity to produce fresh insights by focussing on the interactions between actors (Acs
et al., 2017). The entrepreneurial ecosystems literature provides lists of regional resources
that impact entrepreneurship and how they interact, however entrepreneurial ecosystems
are highly variegated with differing dynamics, broadly delineated by their stage of growth
and categorised as embryonic or scale-up ecosystems (Brown and Mason, 2017). Most
entrepreneurial ecosystems studies focus on listing components without considering the
evolutionary nature of the components (Mack and Mayer, 2016) which is an important
consideration because the strength of components changes over time, as do the policies
necessary to support these systems. Nonetheless, some crucial regional resources such as
the knowledge base are sometimes considered “sticky”(Nicotra et al., 2018; Qian, 2018)
which raises a question of how the region might transform.
Entrepreneurial ecosystems evolution may follow a life cycle theory that culminates with the
decline of supporting elements and levels of entrepreneurship (Mack and Mayer, 2016) or a
process theory that leads to either a resilient or weakened ecosystem depending on the recycling
and flow of resources (Spigel and Harrison, 2018). Understanding the resilience of an
entrepreneurial ecosystem to recover from and adapt to shocks (Roundy et al.,2017)isimportant
because it offers a policy lever that allows an ecosystem to avoid the inevitability of a life cycle
path and sustain levels of entrepreneurship. A social network approach that investigates the
interactions within an entrepreneurial ecosystem can uncover how ecosystems evolve
(Motoyama and Knowlton, 2017), as well as provide insights into the structure of the region.
Journal of Entrepreneurship and
Public Policy
Vol. 8 No. 3, 2019
pp. 359-383
© Emerald PublishingLimited
2045-2101
DOI 10.1108/JEPP-04-2019-0030
Received 16 April 2019
Accepted 25 April 2019
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/2045-2101.htm
359
Regional
capability
emergence
Although previous approaches to regional growth have explored the evolutionary nature
of regional economies (Casper, 2007; Ter Wal, 2013) and have categorised regions by their
structure (Markusen, 1996; He and Fallah, 2011), they have typically ignored an important
source of human capital present in the entrepreneur (Sternberg, 2010; Motoyama and
Knowlton, 2017). This is addressed by the entrepreneurial ecosystems approach that
emphasises not only the entrepreneur as a central actor (Acs et al., 2017; Malecki, 2018,
Brown and Mason, 2017) but also highlights knowledge capital (Nicotra et al., 2018).
However, capabilities related to scaling and market penetration have not been considered in
the entrepreneurial ecosystems literature to date.
Using network analysis, which the entrepreneurial ecosystems literature makes almost
no reference to in both theoretical and analytical terms (Alvedalen and Boschma, 2017), this
study shows how the leaders of high-growth firms in Dublin drew upon prior employment
experience to establish an increasingly resilient network of capabilities. Dublin’s internet
cluster makes for an interesting case because it is dominated by firms focussed on rapid
growth and market penetration in Europe, the Middle East and Africa (EMEA), a core
capability required in entrepreneurial ecosystems of high-growth firms. This study uses
employment history obtained from publicly accessible sources for 113 leaders of Dublin’s
high-growth, foreign-owned Information Technology (IT) firms which established European
operations since 2000. In doing so, it finds that the structure of the scaling capability
network follows a path from a low-density satellite platform to a higher density “hub and
spoke”type structure. Finally, the region shows signs of evolving into a Marshallian type
structure with a high level of resilience.
This paper contributes to the entrepreneurial ecosystems literature by using a novel
analytic technique to show how high-growth firms draw on capabilities present in the region
when establishing offices to grow into new markets. This recycling of regional resources
results in increased regional resilience. Second, it contributes to the literature by providing
empirical evidence that as a region increases in resilience, it also transforms in structure.
Third, it provides empirical support for prior experience as a causal mechanism for
knowledge capital accumulation within an entrepreneurial ecosystem.
2. Literature review
A wide net is required to explore the literature related to the regional resources that impact
entrepreneurship, how these differ depending on the maturity and structure of the region,
and the mechanisms that explain the relationship between the regional resources and the
resulting entrepreneurship. The entrepreneurial ecosystems perspective offers a promising
approach to studying the regional context of entrepreneurship and has attracted significant
attention (Alvedalen and Boschma, 2017; Malecki, 2018). Lineages of the entrepreneurial
ecosystems literature stems from regional development and strategy literature (Acs et al.,
2017) including frameworks such as industrial districts (Becattini, 1990; Pyke et al., 1990),
industrial clusters (Porter, 1990, 2003) and innovation systems (Lundvall, 1985; Freeman,
1988; Cooke, 1992; Nelson, 1993; Edquist, 1997; Maskell, 2001).
These concepts have been used interchangeably (He and Fallah, 2011; Hervas-Oliver
et al., 2015; John and Pouder, 2006; Martin and Sunley, 2003), perhaps because the
frameworks have many resources and boundaries in common, however, they place an
emphasis on different aspects of the region. Regional innovation systems emphasise the
coordinating role of institutions to produce and share knowledge while industrial clusters
focus on the competitive advantage of an industry in the region. Entrepreneurial ecosystems
place the emphasis on the entrepreneur as the central actor (Acs et al., 2017; Malecki, 2018;
Brown and Mason, 2017), although different types of entrepreneurs draw on different
types of resources (Neumeyer et al., 2019). Although many of the resources listed in
the entrepreneurial ecosystems literature are common to prior regional frameworks, the
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