Public Accelerators in Entrepreneurial Ecosystems: Resource Orchestration in the Early Ecosystem Evolution [1st ed.] 9783658316549, 9783658316556

Table of contents :
Front Matter ....Pages I-XV
Introduction (Jan Harima)....Pages 1-10
Conceptual Background (Jan Harima)....Pages 11-85
Methodology (Jan Harima)....Pages 87-101
Research Setting (Jan Harima)....Pages 103-120
Results (Jan Harima)....Pages 121-220
Discussion (Jan Harima)....Pages 221-229
Conclusion (Jan Harima)....Pages 231-240
Back Matter ....Pages 241-263

Citation preview

Jan Harima

Public Accelerators in Entrepreneurial Ecosystems Resource Orchestration in the Early Ecosystem Evolution

Public Accelerators in Entrepreneurial Ecosystems

Jan Harima

Public Accelerators in Entrepreneurial Ecosystems Resource Orchestration in the Early Ecosystem Evolution

Jan Harima Bremen, Germany Dissertation Faculty 7: Business Studies & Economics, Universität Bremen Date of the oral examination: December 17, 2019 First Examiner: Prof. Dr. Jörg Freiling Second Examiner: Prof. Dr. Christoph Burmann Reviewers: Prof. Dr. Kalevi Kyläheiko Prof. Dr. Georg Müller-Christ

ISBN 978-3-658-31654-9 ISBN 978-3-658-31655-6  (eBook) https://doi.org/10.1007/978-3-658-31655-6 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer Gabler imprint is published by the registered company Springer Fachmedien Wiesbaden GmbH part of Springer Nature. The registered company address is: Abraham-Lincoln-Str. 46, 65189 Wiesbaden, Germany

Acknowledgments Foremost, I would like to express my sincere gratitude to my Ph.D. supervisor and the first examiner Prof. Dr. Jörg Freiling, for his continuous support, advice, and motivation. His highly professional academic guidance and passion nurtured my research interest. His constant assistance, with his constructive feedback, as well as encouragement, enabled me to complete my Ph.D. thesis. I would also like to significantly appreciate the second examiner for my thesis, Prof. Dr. Christoph Burmann, for his thorough examination of my thesis and the valuable feedback. Apart from the examiners, I would like to thank the reviewers of my thesis Prof. Dr. Kalevi Kyläheiko and Prof. Dr. Georg Müller-Christ, for their insightful comments and thoughtful questions during the disputation. I also feel grateful to have amazing colleagues at the Chair in Small Business & Entrepreneurship (LEMEX) at the University of Bremen, Dr. Martin Holi, Dr. Diana Chernetska. Thomas Baron, Cat My Dang, Jan Elsner, Quynh Duong Phuong, Tenzin Yeshi, Tatevik Narimanyan, Manal Haimour, and Katja Starke for their continuous support and feedback, both on the professional and private levels. The regular idea exchanges and mutual encouragement not only in research seminars but also in informal occasions were valuable input for my research endeavor. Besides my colleagues, I thank the external doctoral students at LEMEX, who provided me with insightful feedback during the research seminars. My thanks also go to my wife, Dr. Aki Harima, who supported me during my doctoral studies with her academic and emotional support, which kept me on the right track. Last but not least, I would like to emphasize that I had excellent support for the data collection of my Ph.D. thesis in Santiago de Chile. I would like to appreciate Start-Up Chile and its staff for enabling me to conduct my research. I also thank all interviewees, who kindly spared their precious time to provide me with their previous experience and comprehensive insights of the accelerator, their entrepreneurial activities, and the Santiago entrepreneurial ecosystem. Dr. Jan Harima

Table of Contents 1 Introduction...................................................................................................... 1 1.1 Background and Practical Relevance ......................................................... 1 1.2 Research Relevance ................................................................................... 3 1.3 Research Aims ........................................................................................... 7 1.4 Research Approach .................................................................................... 9 1.5 Study Structure......................................................................................... 10 2 Conceptual Background ................................................................................ 11 2.1 Entrepreneurial Ecosystems ..................................................................... 11 2.1.1 Emergence of Entrepreneurial Ecosystem Research ........................ 11 2.1.2 Definition of Entrepreneurial Ecosystems........................................ 16 2.1.3 Antecedents and Related Concepts .................................................. 23 2.1.4 Conceptualization of Entrepreneurial Ecosystems ........................... 30 2.2 Accelerators ............................................................................................. 58 2.2.1 History of Accelerators .................................................................... 59 2.2.2 Contrast Between Accelerators and Their Antecedents ................... 63 2.2.3 Characteristics of Accelerators ......................................................... 69 2.2.4 Classification of Accelerators .......................................................... 75 2.3 Research Gaps and Research Questions ................................................... 79 2.3.1 Early Development of Entrepreneurial Ecosystems ......................... 80 2.3.2 Top-Down Approach by Anchor Tenants ........................................ 82 2.3.3 Public Accelerators as Anchor Tenants in Nascent Ecosystems ...... 82 3 Methodology ................................................................................................... 87 3.1 Research Design....................................................................................... 87 3.1.1 Philosophical Worldview ................................................................. 87 3.1.2 Qualitative Research Approach ........................................................ 88 3.1.3 Single Case Study ............................................................................ 89

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3.2 Empirical Data ......................................................................................... 90 3.2.1 The Case: Start-Up Chile & the Santiago Entrepreneurial Ecosystem ........................................................................................ 90 3.2.2 Selection of Interviewees ................................................................. 90 3.2.3 Data Collection................................................................................. 94 3.3 Data Analysis ........................................................................................... 97 3.4 Ensuring Methodological Rigor ............................................................... 99 4 Research Setting........................................................................................... 103 4.1 The Santiago Entrepreneurial Ecosystem............................................... 103 4.2 The Public Accelerator Start-Up Chile .................................................. 106 4.2.1 Emergence and Evolution of Start-Up Chile .................................. 107 4.2.2 Start-Up Chile’s Acceleration Program.......................................... 109 4.2.3 Objectives and the Proclaimed Impact of Start-Up Chile .............. 118 5 Results ........................................................................................................... 121 5.1 Public Accelerators as Resource Orchestrators in Nascent Ecosystems..121 5.2 Acquiring Resources from Outside the Ecosystem ................................ 128 5.2.1 Acquisition of Specific Knowledge................................................ 131 5.2.2 Acquisition of Global Social Capital .............................................. 134 5.2.3 Acquisition of Entrepreneurial Culture .......................................... 137 5.2.4 Summary of Acquiring Resources from Outside the Ecosystem ... 140 5.3 Integrating and Accumulating Acquired Resources in the Accelerator...142 5.3.1 Community Building ...................................................................... 144 5.3.2 Building a Community-Level Entrepreneurial Culture .................. 152 5.3.3 Facilitating Knowledge Sharing ..................................................... 156 5.3.4 Organizational Learning and Knowledge Accumulation ............... 165 5.3.5 Summary of Resource Integration and Accumulation in the Accelerator ...................................................................................... 170 5.4 Developing Entrepreneurial Ecosystem Resources ................................ 172

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5.4.1 Facilitating Diverse Interactions Between the Accelerator and the Ecosystem ......................................................................... 174 5.4.2 Activating Local Talent .................................................................. 180 5.4.3 Transferring Knowledge from the Accelerator to the Ecosystem .. 187 5.4.4 Creating an Ecosystem-Level Entrepreneurial Culture .................. 193 5.4.5 Creating Ecosystem-Level Social Capital ...................................... 199 5.4.6 Summary of Developing Entrepreneurial Ecosystem Resources ... 202 5.5 Coordinating the Ecosystem Resource Flow.......................................... 204 5.5.1 Activating and Integrating Passive or New Ecosystem Stakeholders .................................................................................... 205 5.5.2 Connecting Ecosystem Stakeholders with Each Other................... 207 5.5.3 Connecting the Entrepreneurial Ecosystem to the World............... 209 5.5.4 Summary of the Coordination of Ecosystem Resource Flow ......... 213 5.6 Facilitating Entrepreneurial Ecosystem Resource Recycling ................. 215 5.7 Summary of the Results ......................................................................... 219 6 Discussion ..................................................................................................... 221 6.1 Research Synopsis.................................................................................. 221 6.2 Research Contributions .......................................................................... 223 6.2.1 Resource Injection into the Entrepreneurial Ecosystem ................. 224 6.2.2 Resource Organization within the Ecosystem ................................ 226 6.2.3 Resilient Entrepreneurial Ecosystems ............................................ 227 7 Conclusion .................................................................................................... 231 7.1 Limitations ............................................................................................. 231 7.2 Practical Implications ............................................................................. 233 7.2.1 Policymakers .................................................................................. 233 7.2.2 Public Accelerator Managers ......................................................... 234 7.3 Research Outlook ................................................................................... 237 References........................................................................................................ 241

List of Abbreviations AMA B2B B2C CEO CORFO e.g. GDP KPI MVP RQ RP SAS TSF UK US VC

Ask me anything Business to business Business to customer Chief executive officer Corporación de Fomento de la Producción Exempli gratia Gross domestic product Key performance indicator Minimal viable product Research question Research proposition Software as a service The S-Factory United Kingdom United States Venture capitalist

List of Figures Figure 1: Research Gaps and RQs ........................................................................ 9 Figure 2: Isenberg's Entrepreneurial Ecosystem Model...................................... 15 Figure 3: Critical Aspects of Entrepreneurial Ecosystems ................................. 32 Figure 4: Relationships Among Ecosystem Attributes ....................................... 37 Figure 5: Evolution of an Entrepreneurial Ecosystem ........................................ 39 Figure 6: Key Actors Within Entrepreneurial Ecosystems ................................. 40 Figure 7: Changes in Governance Structures During Ecosystem Evolution....... 46 Figure 8: Transformation of Entrepreneurial Ecosystems .................................. 49 Figure 9: Complexity of Entrepreneurial Ecosystems ........................................ 55 Figure 10: Three Interrelated Forces of Ecosystem Emergence ......................... 57 Figure 11: Accelerators in Berlin ........................................................................ 58 Figure 12: Accelerator Process Lifecycle ........................................................... 71 Figure 13: Design Elements and Constructs of Accelerators.............................. 73 Figure 14: Data Collection Process..................................................................... 96 Figure 15: Examples of Open Coding ................................................................ 98 Figure 16: Example of Data Structure for One Aggregated Dimension ........... 101 Figure 17: Start-Up Chile Programs ................................................................. 109 Figure 18: Start-Up Chile Accelerator Design Seed Program .......................... 110 Figure 19: Resource Orchestration Process ...................................................... 122 Figure 20: Public Accelerators' Resource Orchestration in Entrepreneurial ........... Ecosystems ...................................................................................... 125 Figure 21: Data Structure of Acquiring Resources from Outside the .................... Ecosystem ........................................................................................ 130 Figure 22: Summary of Acquiring Resources from Outside the Ecosystem .... 142 Figure 23: Data Structure of Integrating and Accumulating Acquired .................. Resources in the Accelerator ........................................................... 143

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List of Figures

Figure 24: Resource Integration Mechanisms .................................................. 144 Figure 25: Summary of Resource Integration and Accumulation in ...................... the Accelerator ................................................................................. 172 Figure 26: Data Structure of Developing Entrepreneurial Ecosystem ................... Resources ......................................................................................... 173 Figure 27: Developing Entrepreneurial Ecosystem Resources ......................... 174 Figure 28: Summary of the Development of Entrepreneurial Ecosystem............... Resources ......................................................................................... 204 Figure 29: Data Structure of Coordinating the Ecosystem Resource Flow ...... 205 Figure 30: Summary of the Coordination of Ecosystem Resource Flow .......... 215 Figure 31: Data Structure of Facilitating Entrepreneurial Ecosystem .................... Resource Recycling ......................................................................... 216 Figure 32: Summary Facilitation of Entrepreneurial Ecosystem Recycling ..... 219 Figure 33: Continuous Cycle of Ecosystem Evolution ..................................... 220

List of Tables Table 1: Number of Publications on Entrepreneurial Ecosystems ........................ 4 Table 2: Three Popular Definitions of Entrepreneurial Ecosystems ................... 21 Table 3: Strengths of Discussed Definitions of Entrepreneurial Ecosystems ..... 22 Table 4: Summary of Entrepreneurial Ecosystem Antecedents .......................... 25 Table 5: Previous Research that Identified Ecosystem Components .................. 34 Table 6: Three Layers of Entrepreneurial Ecosystem Components .................... 36 Table 7: Basic Typology of Entrepreneurial Ecosystem Evolution .................... 42 Table 8: Characteristics of Transformation of Entrepreneurial Ecosystems ....... 49 Table 9: Definitions of Accelerators ................................................................... 63 Table 10: The Business Incubator Continuum .................................................... 65 Table 11: Summary of Differences Between Accelerators and Incubators ........ 67 Table 12: Accelerator Classification ................................................................... 76 Table 13: List of Interviewees ............................................................................ 91 Table 14: Overview Methodological Rigor ........................................................ 99

1 Introduction 1.1 Background and Practical Relevance In recent decades, various innovations, such as the introduction of personal computers, the internet, and smartphones, and their applications have heavily influenced the way people live and conduct economic activities. These technological advancements have been driven by young, innovative, growth-oriented companies that have acquired enormous market shares in the process and changed the conventional structures of entire markets. Prominent examples of such startups include Apple, SAP, and Microsoft in the personal computer market; Amazon, Google, Alibaba, and Facebook with the worldwide adoption of the internet; and Instagram, Snapchat, WhatsApp, and WeChat with the diffusion of smartphones. Another example is PayPal, which changed the rules of the game in the financial industry. Similarly, the entry of the electric car company Tesla into the market forced the existing players to develop new types of emission-free cars. Airbnb created an alternative peer-to-peer accommodation for travelers and brought a new wave to the travel industry. Uber has enabled customers to call, book, trace, and pay cabs with an app, which has influenced the local transportation industry. SpaceX revolutionized the classic space industry with the idea and successful development of reusable rockets. In addition to these well-known examples, many startups have created innovative products and services within their industries, changing the markets in which they operate in the process. Startups are different from conventional small or medium enterprises, which follow traditional, broadly linear growth paths. By contrast, startups create innovative products or/and business models that are often new to the market. They aim to scale their business rapidly, mostly on an international scale. Although the overall number of startups is smaller compared to classic small or medium enterprises, the economic value that startups create is massive, with a recent report showing, for instance, that startups were responsible for 68% of British employment growth between 2012 and 2013 and contributed 36% of the gross value added to the British economy, even though they account only for 1% of all British businesses (Octopus High Growth Small Business Report 2014, 2014). Recently, scholars have initiated discussions on regional environmental factors that influence the emergence, survival, and success of startups. Having observed that some regions have more startups with higher ratios of success cases than other areas, scholars have tended to assume that there are certain regional dynamics that create favorable conditions for startup activities (Isenberg, 2011; Mason & Brown, 2014). In the last few years, this interest has manifested in the concept of “entrepreneurial ecosystems,” which are defined as sets “of interdependent actors and © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020 J. Harima, Public Accelerators in Entrepreneurial Ecosystems, https://doi.org/10.1007/978-3-658-31655-6_1

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factors coordinated in such a way that they enable productive entrepreneurship within a particular territory” (Stam & Spigel, 2016, p. 1). The “Global Startup Ecosystem Report 2019” (Startup Genome, 2019) shows some numbers for certain regions as evidence for the economic contribution of startups. Silicon Valley, the largest entrepreneurial ecosystem in the world, has an output of 13,000–18,000 software startups each year. Its overall ecosystem value1 is 312 billion US dollars (USD), which is half of the overall regional gross domestic product (GDP), and the total early-stage funding of startups in Silicon Valley was 11.7 billion USD in 2018 (Startup Genome, 2018, 2019). Apart from Silicon Valley, some regions outside the United States (US) with a smaller national market size also successfully developed thriving ecosystems; these include Stockholm, with less than a million inhabitants, and Tel Aviv, with less than 500,000 inhabitants. Stockholm produces around 1,000 software startups a year and had an ecosystem value of 36 billion USD in 2019. The mid-sized city of Tel Aviv has an output of 2,800–3,700 software startups each year and an overall ecosystem value of 30 billion USD (Startup Genome, 2019). The apparent success of such regions has brought regional factors to the forefront of policy interest. Scholars have investigated the factors that help the development and growth of entrepreneurial ecosystems. For instance, Saxenian (1996) proposed local culture as an important factor for the success of Silicon Valley. With regard to the success of Israel and Tel Aviv, Senor and Singer (2011) highlighted the importance of strong government involvement and abundant venture capital in the region. To understand how an entrepreneurial ecosystem is developed, both researchers and policymakers tend to look at thriving entrepreneurial ecosystems that have favorable institutional environments, as well as abundant regional resources for startups. However, when supportive institutional environments and critical entrepreneurial resources are unavailable in the region, individual actors’ activities become more influential. One of such influential ecosystem actors can be so-called accelerators (Bliemel et al., 2019). These “startup factories” offer resources to young firms and educate them in batches over the course of a few months. The first accelerator was Y Combinator, which was founded in 2005 by a small group of business angels. In the first 13 years of its existence, Y Combinator funded over 1,900 startups, generating a combined valuation of over 100 billion USD in 2018 (“Y Combinator,” 2014). The early success of Y Combinator has raised attention among other angel

1

The ecosystem value in the Global Startup Ecosystem Report 2019 measures the economic impact of the ecosystem, calculated as the total exit valuation and startup valuations over a two and a half year time period.

1.2 Research Relevance

3

investors. In 2006, former entrepreneurs and investors Brad Feld, Jared Polis, David Cohen, and David Brown copied the approach of Y Combinator and started the accelerator TechStars to help startups in the local entrepreneurial ecosystem in Boulder, Colorado, grow and attract new investment opportunities to the region (Feld, 2012). Data from Pitchbook 2016 (2016) demonstrates that a third of all startups in the US that raised their first large round of venture capital funding in 2015 had previously attended an accelerator program. Recently, other entrepreneurial ecosystem stakeholders2 such as public institutions have begun to develop governmental accelerators to foster regional startup scenes. However, it remains unclear how policymakers can effectively use this instrument as a measure to develop regional entrepreneurial ecosystems. 1.2 Research Relevance The concept of entrepreneurial ecosystems has recently gained popularity among entrepreneurship researchers and economic geographers (e.g., Audretsch & Belitski, 2017; Brown & Mason, 2017; Spigel, 2017; Spigel & Harrison, 2018; Stam, 2015). The growing attention to this topic is visible in the fact that the vast majority of literature on the topic has been published after 2014. A Google Scholar search with the exact phrase “entrepreneurial ecosystem” shows less than 1,000 entries from 1900–2013 and 5,820 results from 2014 to June 2019 (Table 1). While the research on entrepreneurial ecosystems is rather new, the concept has several antecedents, such as clusters (e.g., Gilbert, McDougall, & Audretsch, 2008; Martin & Sunley, 2003; Porter, 2000), regional innovation systems (e.g., Asheim & Isaksen, 2002; Asheim, Smith, & Oughton, 2011; Cooke, 2001; Cooke, Uranga, & Etxebarria, 1997), and business ecosystems (e.g., Adner, 2017; Adner & Kapoor, 2010; Iansiti & Levien, 2004; Williamson & De Meyer, 2012). These related concepts share similarities with that of entrepreneurial ecosystems since they explain how different actors interact to create certain dynamics and mutual goals. However, the main difference is that the concept of entrepreneurial ecosystems deals with entrepreneurs and their startup activities as a central element in the entire system (Roundy, Bradshaw, & Brockman, 2018; Spigel & Harrison, 2018). Having considered such differences and similarities among these concepts, previous scholars have been inspired by the literature on antecedent concepts, 2

Adapting the stakeholder definition developed in the classic management scholarly concept by Freeman (2010, p. 48), this study defines entrepreneurial ecosystem stakeholders as groups and individuals who can affect the entrepreneurial activities of startups in the region.

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which has a longer history and offers a wider range of knowledge. For instance, Spigel and Harrison (2018) critically contrasted entrepreneurial ecosystems as a newly emerging concept with regional innovation systems and clusters to understand their distinctive natures and Colombelli et al. (2019) referred to the literature on business ecosystems to understand the evolutionary nature of entrepreneurial ecosystems. Table 1: Number of Publications on Entrepreneurial Ecosystems

Google Scholar search with the exact phrase “entrepreneurial ecosystem” Period 1900–2003 2004–2008 2009–2013 2014–06/2019

Exact phrase in the title 1 4 52 384

Exact phrase in the text 54 130 799 5,820

While early literature focuses on identifying the core elements of the concept (Brown & Mason, 2017; Isenberg, 2011; Spigel, 2017; Stam, 2015), more recent scholarly conversation has increasingly paid attention to the dynamic and complex nature of entrepreneurial ecosystems. Entrepreneurial ecosystems are considered to possess complex idiosyncratic structures consisting of various actors, organizations, and resources that are constantly altered by dynamic processes (Brown & Mason, 2017; Spigel & Harrison, 2018). One of the significant recent contributions to understanding the complex nature of entrepreneurial ecosystems was made by Roundy, Bradshaw, and Brockman (2018). They argued that one can understand entrepreneurial ecosystems as complex adaptive systems with open but distinct boundaries. They can be seen to gain emergent behavior through self-organization and to be adaptable through non-linear dynamics, such as flexible interactions among complex components that are sensitive to the initial conditions of the system (Roundy et al., 2018). In the dynamic interactions that comprise an entrepreneurial ecosystem, different types of entrepreneurial resources are transferred. Extant research has proposed conceptual frameworks that suggest that the material, social, and cultural components of entrepreneurial ecosystems support the attraction, creation, recycling, and flow of resources such as knowledge, social capital, and financial capital (Brown & Mason, 2017; Colombelli et al., 2019; Spigel & Harrison, 2018; Stam, 2015; Stam & Spigel, 2017). Among scholars, there is a consensus on the significance of ecosystem resources as a determinant for the development and output of an entrepreneurial ecosystem (Brown & Mason, 2017; Spigel & Harrison, 2018). In other words, the process of ecosystem development can be understood as the

1.2 Research Relevance

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accumulation of resources that are necessary for the entrepreneurial activities of startups in the region and their flow between multiple different actors. To understand the phenomenon of entrepreneurial ecosystems, recent studies have begun to highlight their evolutionary nature, which constantly develops the structure and processes of entrepreneurial ecosystems from nascent to more mature ecosystems (Brown & Mason, 2017; Mack & Mayer, 2016). Due to their complexity, to regional embeddedness, and to various types of interaction among stakeholders, entrepreneurial ecosystems are by nature idiosyncratic and dynamic. However, the extant literature has not developed a sufficient understanding of their evolutionary nature and how internal processes and dynamics form unique evolving structures (Alvedalen & Boschma, 2017; Colombelli et al., 2019). Alvedalen and Boschma (2017) criticized the entrepreneurial ecosystem literature for tending “to provide a static framework taking a snapshot of entrepreneurial ecosystems without considering systematically their evolution over time” (p. 887). This kind of static framework is exemplified by Brown and Mason (2017), who introduced a binary typology of entrepreneurial ecosystems, which suggests that the evolution of entrepreneurial ecosystems begins with a nascent ecosystem with few entrepreneurial activities. This small-scale entrepreneurial ecosystem can potentially develop into a well-developed ecosystem with a large number of diverse interdependent actors, resources, and entrepreneurial activities when the region successfully creates the conditions of a startup-friendly environment, that is, a sufficient resource base and sufficient dynamic interactions. They proposed that the number of ecosystem dynamics, such as resource recycling or the fluidity and diversity of ecosystem actors, determines the level of ecosystem evolution. Spigel and Harrison (2018) introduced a similar model of ecosystem evolution, with one transformation stage added to the stages proposed by Brown and Mason (2017). According to their argument, nascent ecosystems must improve their resource accumulation process by attracting, creating, and recycling resources. The creation of such resource bases is supported by a high level of connectivity between actors and regional culture. While these studies identify important factors that influence the evolution of entrepreneurial ecosystems such as a regional resource base, the number of ecosystem stakeholders, and the intensiveness and amount of interactions within the ecosystem, extant research fails to offer explanations of how nascent entrepreneurial ecosystems can advance these factors to strengthen and sustain dynamics that lead to the formation and scaling of startups. In other words, the studies on ecosystem evolution describe what an evolution looks like, rather than explaining possible approaches that a region can take to stimulate ecosystem evolution. Therefore, we still know little about the concrete mechanisms that transform a nascent entrepreneurial ecosystem into a more advanced one.

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To explore such approaches to ecosystem evolution, Colombo, Dagnino, Lehmann, and Salmador (2019) differentiated both top-down and bottom-up approaches from the perspective of ecosystem governance and argued that they should be combined when developing nascent ecosystems. This argument is, however, only valid when a region begins with a sufficient resource base to create bottom-up dynamics. Generally, scholars tend to focus on investigating thriving entrepreneurial ecosystems, such as Silicon Valley (Saxenian, 1994, 2002), Berlin (Baron & Harima, 2019), or Waterloo (Spigel, 2017). While such studies can provide rich insights into the success mechanisms of entrepreneurial ecosystems, the over-emphasis on privileged cases leads to the shortage of knowledge with regards to failure mechanisms and to a lack of information on the implications for the less privileged regions, with a limited base of entrepreneurial resources. In fact, most of the regions in which policymakers aim to create an entrepreneurial ecosystem are not attractive for startups by nature and lack entrepreneurial resources. Realistically, one cannot expect bottom-up initiatives to naturally emerge within such a region and thence lead to the ecosystem evolution that allows the region to overcome resource deficiency and institutional weaknesses. This fact indicates the necessity of top-down interventions, which are usually initiated by the regional government or another dominant actor to enhance the resource pool within the region and to create a fertile ground for entrepreneurial activities (Brown & Mason, 2017). Now, questions remain as who such a dominant actor can be and how exactly such an actor can actually develop regional entrepreneurial resources through top-down approaches. Colombelli et al. (2019) labeled such actors “anchor tenants” and investigated the self-reinforcing interactions within nascent ecosystems. One way to overcome the lack of entrepreneurial resources is that such anchor tenants ‘inject’ resources into their ecosystems which they either developed themselves or attracted from other entrepreneurial ecosystems (Brown, Mawson, Lee, & Peterson, 2019; Roundy et al., 2018; Spigel & Harrison, 2018). This study focuses on accelerators as a particular type of anchor tenant within nascent entrepreneurial ecosystems. While Section 1.1 demonstrated the impact of accelerators, noting the growing numbers of participants and their success in raising venture funding, surprisingly few studies have been conducted on the topic thus far. Miller and Bound (2011) conducted one of the first studies on accelerators, defining an accelerator as an organization with “an application process that is open to all, yet highly competitive, provision of pre-seed investment, usually in exchange for equity, a focus on small teams not individual founders, time-limited support comprising programmed events and intensive mentoring, cohorts or ‘classes’ of startups rather than individual companies” (p. 3). Early studies suggest the positive influence of accelerators in terms of the knowledge acquisition of participating startups (Battistella, De Toni, & Pessot, 2017; Hallen, Cohen, & Bingham,

1.3 Research Aims

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2017), of the increase in startup valuation (Kim & Wagman, 2014; Smith & Hannigan, 2015), and of follow-up funding (Fehder & Hochberg, 2015; Radojevich-Kelley & Hoffman, 2012). Apart from these studies on startup impact, scholars have primarily targeted the conceptualization of accelerators as a distinct organizational form (Cohen & Hochberg, 2014; Pauwels et al. 2016). Having witnessed the growing impact of accelerators on global startup scenes, an increasing number of public actors have recently begun to offer accelerators as a startup support instrument to create favorable conditions in their nascent entrepreneurial ecosystems (Bliemel et al., 2019). Public accelerators can be considered a particular type of top-down governance approach due to the fact that they are initiated and managed by public entities, such as national and regional governmental organizations or economic development agencies. This study aims to investigate the potential roles of public accelerators as an anchor tenant in the emergence and early development of entrepreneurial ecosystems. 1.3 Research Aims Discussions in Sections 1.1 and 1.2 reveal a few critical aspects of deriving significant research gaps. The first thing that became clear was a lack of research on the early evolution of nascent entrepreneurial ecosystems. Early studies tend to determine essential structural elements of entrepreneurial ecosystems by analyzing literature on antecedent concepts such as clusters and regional innovation systems as well as thriving entrepreneurial ecosystems in privileged regions, such as Silicon Valley and Berlin (Baron & Harima, 2019; Brown et al., 2019; Saxenian, 1994). While scholars have recently begun to pay attention to the complex, evolutionary nature of entrepreneurial ecosystems, their studies deal with ecosystem evolution on a large scale by contrasting nascent and advanced entrepreneurial ecosystems. As a result, their findings fail to develop an understanding of how a region that does not have favorable conditions for high-growth startups can transform its nascent entrepreneurial ecosystem. Such a region often lacks traditional entrepreneurial resources, such as investors, entrepreneurial talent, support infrastructure, and networks between startups and other ecosystem stakeholders. The second aspect that the discussions above revealed is a possible mechanism that helps a region develop an entrepreneurial ecosystem: a top-down approach by anchor tenants (Colombelli et al., 2019). When a critical mass of entrepreneurial resources is not available in the region, a top-down approach from a dominant ecosystem stakeholder is effective, as resource constraints unavoidably hinder the emergence of bottom-up evolutionary dynamics (Brown & Mason, 2017; Colombelli et al., 2019; Colombo et al., 2019; Spigel & Harrison, 2018). In other words, anchor tenants take actions to enhance an entrepreneurial resource pool

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1 Introduction

within the region. One effective way suggested by scholars is to inject resources acquired from other entrepreneurial ecosystems into the region (Roundy et al., 2018; Spigel & Harrison, 2018). By acquiring entrepreneurial resources from outside, regions can develop a sufficient resource base to advance their entrepreneurial ecosystems. The third aspect that previous sections highlighted is the potential of public accelerators as anchor tenants. In the last decade, accelerators have had a significant impact on the global startup scene by fostering entrepreneurial talent and connecting entrepreneurs and ecosystem stakeholders (Bliemel et al., 2019; Brown et al., 2019; Drori & Wright, 2018; Roundy, 2017). Recently, it has become increasingly common among policymakers to create public accelerators as a top-down policy instrument to develop their regional entrepreneurial ecosystems. However, how public accelerators as anchor tenants influence ecosystem evolution remains largely unknown. Based on these three aspects, this study aims to investigate the role of public accelerators in a nascent entrepreneurial ecosystem from a resource perspective. More specifically, the overarching question of this study is: “How do public accelerators influence the early evolution of entrepreneurial ecosystems as anchor tenants?” To structurally answer this overarching question, this study sets three research questions: RQ1: How do public accelerators inject resources into nascent entrepreneurial ecosystems? RQ2: How do public accelerators organize resources within nascent entrepreneurial ecosystems? RQ3: How can entrepreneurial ecosystems become independent from their anchor tenants? RQ1 focuses on the process in which a public accelerator gains access to resources and injects them into the ecosystem. RQ2 deals with the process in which a public accelerator manages and transforms the ecosystem-level resource pool. The underlying assumption of RQ1 and RQ2 is that there are several unknown mechanisms the public accelerator facilitates to successfully inject external entrepreneurial resources into the region and to develop ecosystem resources. RQ3 aims to illuminate the reverse causality between top-down approaches of anchor tenants and the early evolution of the entrepreneurial ecosystem. Colombelli et al. (2019) proposed the transition of entrepreneurial ecosystems from a hierarchical design toward a relational one over the course of the ecosystem's evolution and suggested changing the roles of anchor tenants in this process. By answering RQ3, this study critically considers how entrepreneurial ecosystems can emancipate themselves from their anchor tenants. Figure 1 illustrates how RQs are derived based on research gaps.

1.4 Research Approach

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Early ecosystem evolution

Anchor tenants

Public accelerators as resource orchestrators

Overarching Research Question: “How do public accelerators influence the early evolution of entrepreneurial ecosystems as anchor tenants?“ • • •

RQ1: How do public accelerators inject resources into nascent entrepreneurial ecosystems? RQ2: How do public accelerators organize resources within nascent entrepreneurial ecosystems? RQ3: How can entrepreneurial ecosystems become independent from their anchor tenants?

Figure 1: Research Gaps and RQs

1.4 Research Approach Due to the insufficient empirical evidence and theoretical foundations for the observed phenomena in the literature, this study uses a qualitative, interpretative, and explorative research design with a single case study, that of the public accelerator Start-Up Chile, in the entrepreneurial ecosystem of Santiago, Chile. Single case studies are perceived to be a method that helps maximize understanding of unique cases (Creswell, 2013; Stake, 2010; Yin, 2009), and this study seeks to explore the unique and complex setting of the public accelerator Start-Up Chile and its interaction with the multifaceted Santiago entrepreneurial ecosystems. This case is unique, as Start-Up Chile describes its mission as developing a regional

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1 Introduction

entrepreneurial ecosystem, and it therefore offers equity-free investment and other program contents for free. What makes Start-Up Chile famous in the global startup scene is its strong global orientation and focus on foreign startups. Start-Up Chile strategically aimed to attract foreign startups to Chile to activate local talent and resources. Start-Up Chile has 200–250 participants per year, of which 60–80% are foreign startups brought to the ecosystem. It is one of the most well-known public acceleration programs in the world. After Start-Up Chile was established, in the past decade, the Santiago ecosystem has grown rapidly. This case can therefore offer empirical insight into a unique situation in which a public accelerator as an anchor organization has played a critical role in the early development of an entrepreneurial ecosystem. This study collected different types of data sources. Primary data was collected, mainly via face-to-face semi-structured interviews held between June 17 and July 6, 2017, in Santiago de Chile. The nature of this type of interview, with preformulated guiding questions, allows for flexible adjustment based on what the interviewee emphasizes during the conversation (Atteslander, 2010). This study follows an inductive qualitative approach (Maher, Hadfield, Hutchings, & de Eyto, 2018). To analyze the data in a structured manner, a multi-stage coding process was adapted. Due to the inductive and explorative approach of the study, no prebuilt categories were defined. The data was analyzed following the category-building method of Gioia, Corley, & Hamilton (2013), which aims to ensure rigor in qualitative research. 1.5 Study Structure This study consists of seven chapters. After introducing the research relevance, research gaps, and research aims in this first chapter, conceptual backgrounds on entrepreneurial ecosystems and accelerators are presented, in the second chapter. The review of both research streams helps identify the status of current research, introduce the relevant concepts, delineate research gaps, and formulate the research questions that guide this study. Thereafter, the methodology used in this study is presented, in the third chapter. Methods and processes for the research approach, data collection, data selection, and data analysis are explained. In the fourth chapter, the research setting is introduced, with an overview of the Santiago entrepreneurial ecosystem and Start-Up Chile provided. Chapter 5 presents the results of the empirical work. In Chapter 6, the findings are discussed with regard to the impact of public accelerators within entrepreneurial ecosystems. Finally, in Chapter 7, conclusions, with limitations, practical implications, and future research directions, are presented.

2 Conceptual Background This chapter presents the conceptual background of this study by conducting a literature review on two research streams. The first is research on entrepreneurial ecosystems. While the concept of entrepreneurial ecosystems is relatively new, the number of studies published on this topic has been rapidly increasing in the last few years. This study considers the conceptual antecedents of entrepreneurial ecosystems in order to highlight their characteristics, thereby crystallizing the nature and scope of the entrepreneurial ecosystem concept. Thereafter, it presents conceptual peculiarities of entrepreneurial ecosystems such as their complex and evolutionary nature. The second research field concerns accelerators, a unique startup support organization, a rather new concept to entrepreneurship research, which is surprising considering the strong presence and performance of accelerators in the practical context of startups and entrepreneurial ecosystems worldwide. Due to the scarcity of literature on accelerators, this study also introduces the literature on business incubators as an antecedent concept. The chapter also highlights different types of accelerators to create an argument defining the nature of public accelerators. 2.1 Entrepreneurial Ecosystems Section 2.1 presents the conceptual background of entrepreneurial ecosystems. Section 2.1.1 describes the emergence and sudden growth of research on entrepreneurial ecosystems, which shows the growing interest in and attention paid to the phenomenon of entrepreneurial ecosystems among management scholars worldwide. Section 2.1.2 then introduces several dominant definitions of entrepreneurial ecosystems and demonstrates the strengths and weaknesses of each definition to develop a consolidated definition for this study. Due to the newness of this topic, there is still no consensus with regard to the definition of entrepreneurial ecosystems. The third sub-section examines the conceptual antecedents of entrepreneurial ecosystems, specifically reviewing (i) clusters, (ii) regional innovation systems, and (iii) business ecosystems. Finally, Section 2.1.4 conceptualizes entrepreneurial ecosystems by highlighting several of their unique aspects, such as their attributes, evolutionary nature, and processes. 2.1.1 Emergence of Entrepreneurial Ecosystem Research While scholars commonly see research on entrepreneurial ecosystems as having started recently (Acs, Stam, Audretsch, & O’Connor, 2017; Alvedalen & Boschma, 2017; Brown & Mason, 2017; Spigel, 2017), the concept did not emerge ex nihilo. The literature in management and economic geography includes many © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020 J. Harima, Public Accelerators in Entrepreneurial Ecosystems, https://doi.org/10.1007/978-3-658-31655-6_2

12

2 Conceptual Background

ideas and arguments, directed towards understanding other distinct phenomena such as industrial clusters, that partially support the concept of entrepreneurial ecosystems. In other words, the concept of entrepreneurial ecosystems was inspired by a wide range of literature to develop a novel way to study entrepreneurial activities. Using this background, this section traces the history of the concept to demonstrate how the entrepreneurial ecosystem has become an important topic in management and entrepreneurship scholarship. Before the 1980s, the majority of entrepreneurship research focused on the personal characteristics and behaviors of individual entrepreneurs. Scholars’ main concern was to understand entrepreneurial activities on the individual level, and external influencing factors did not play specific roles in the majority of entrepreneurship research during that period. In the ‘80s and ‘90s, some scholars started to shift their research focus towards examining how an entrepreneurial process is embedded in its economic and social circumstances (Dodd & Anderson, 2007). Dubini (1989) was one of the first scholars to examine the influence of entrepreneurs’ surroundings on their startups. Notably, Van de Ven (1993) conducted one of the first studies that examined entrepreneurs’ circumstances in a similar sense to the concept of entrepreneurial ecosystems today, using the term “infrastructure for entrepreneurship”. The infrastructure suggested by Van de Ven (1993) includes the following: i) “institutional arrangements to legitimate, regulate, and standardize a new technology; ii) public resource endowments of basic scientific knowledge, financing mechanisms, and a pool of competent labor; as well as iii) proprietary R&D, manufacturing, marketing, and distribution functions by private entrepreneurial firms to commercialize the innovation for profit.” (Van de Ven, 1993, p. 211) By addressing these circumstantial factors faced by entrepreneurs, Van de Ven (1993) criticized entrepreneurship researchers for overemphasizing individualand personality-based explanations of entrepreneurial venturing. He stated that “Popular folklore notwithstanding, the process of entrepreneurship is a collective achievement requiring key roles from numerous entrepreneurs in both the public and private sectors” (Van De Ven, 1993, p. 211). The way Van de Ven (1993) saw entrepreneurs, as embedded entities in institutional environments, has certain similarities to the current view of scholars in the field of entrepreneurial ecosystems. A few years after Van de Ven’s contribution, Saxenian (1994) fueled the discussion on the influence of the environment on entrepreneurial success with her work on the regional advantage of Silicon Valley and her analysis of its success. Saxenian (1994) argued that a distinct entrepreneurial culture was the main distinguishing factor of Silicon Valley. Her research was timely, as the world was at the time witnessing the unexpected success of startups from Silicon Valley, who

2.1 Entrepreneurial Ecosystems

13

changed the rules of the game in many industries. The massive success of Silicon Valley startups triggered interest, and people began to wonder why and how a region can impact entrepreneurial activities. Bahrami and Evans (1995) joined the discussion by proposing that well-functioning resource recycling processes are at the center of Silicon Valley’s success, as these ensure that after the failure or successful sale of a startup, resources do not diminish but are reintroduced into new entrepreneurial activities. More or less concurrently with this finding, Spilling (1996) examined entrepreneurial systems and the complexity of the interdependencies among a diverse set of actors, roles, and environmental factors. He suggested that systems of entrepreneurship change over time and drive regional economic development. Despite such early contributions, the research on environmental factors as explanations for successful entrepreneurship did not become a major field in entrepreneurship research. In their article “Mumpsimus and the mything of the individualistic entrepreneur,” Dodd and Anderson (2007) bemoaned this fact, stating that “The purpose of this article is to explore the persistence, in the face of considerable evidence to the contrary, of the notion that entrepreneurship is a purely individualistic practice. It may be that taking account of the dynamics of social conditioning, social interaction and the embedding process is simply too complex to be used as heuristics; instead, the convenient myth of the romantic of the heroic individual holds sway” (p. 341). Slowly but surely, scholars became increasingly aware of the need to consider entrepreneurial environments in their examination of entrepreneurial success. With the rise of new tech startups such as YouTube and Facebook in the mid2000s, it became apparent that some regions showed significantly stronger performance in fostering extraordinarily successful startups than others. Having witnessed the visible success of certain regions, researchers and policymakers grew increasingly interested in the influence of entrepreneurial activities on the economic development of regions (Audretsch, Keilbach, & Lehmann, Erik, 2006; Galindo & Méndez, 2014). Other regions, such as Boulder, Colorado (Feld, 2012), or Tel Aviv, also demonstrated comparable success in fostering startups in their region, delivering the message to the world that smaller regions can also create vibrant regional dynamics for startups without the large populations seen in the San Francisco Bay area (Startup Genome, 2019). In Germany, Berlin heavily relied on transnational entrepreneurs from Europe and within a short time has become a hub for startups, although the city had been known for its lack of a strong economy (Baron & Harima, 2019; Genome, 2017). Practitioners and politicians began to discuss best practices of how to foster startups in their own regions. Accordingly, the topic of entrepreneurial ecosystems

14

2 Conceptual Background

became an integral part of many regional, national, and even international policy agendas. The growing popularity of the topic has been driven by popular business and management studies published by Feld (2012) and Isenberg (2010, 2011). Isenberg established the Babson Entrepreneurship Ecosystem Project in 2010 to help countries around the world create policies, structures, programs, and overall environments that foster high growth entrepreneurship. What made his work famous was likely the conceptual model he created on the domains of entrepreneurial ecosystems. Within the Babson Entrepreneurship Ecosystem Project, Isenberg (2011) presented a model that consists of six domains, with 12 sub-domains, that are relevant to entrepreneurial ecosystems. The main six domains are (i) policy (leadership, government), (ii) finance (financial capital), (iii) culture (success stories, societal norms), (iv) supports (non-governmental institutions, support professions, infrastructure), (v) human capital (labor, educational institutions), and (vi) markets (early customers, networks). The basic model is presented in Figure 2. Although the model has a strong descriptive nature and serves limited analytical purposes, the visualization of the actors relevant to entrepreneurial activities in a region was an effective tool to help many scholars and policymakers intuitively understand the concept of entrepreneurial ecosystems. In addition to this model, Isenberg (2010) contributed to the development of the entrepreneurial ecosystem concept with his article “How to Start an Entrepreneurial Revolution,” in Harvard Business Review. As a message for policymakers worldwide, Isenberg presents nine prescriptions with which to create an entrepreneurial ecosystem: i) stop emulating Silicon Valley; ii) shape the ecosystem around local conditions; iii) engage the private sector from the start; iv) favor the high potentials; v) get a big win on the board; vi) tackle cultural change head-on; vii) stress the roots; viii) do not over-engineer clusters; help them grow organically; and ix) reform legal, bureaucratic, and regulatory frameworks. Although his arguments were neither theoretically founded nor empirically tested, these nine concrete recommendations, showing possible approaches to ecosystem development for policymakers, stimulated discussions on both the scholarly and political levels. The interest from practitioners was further stimulated by Feld’s (2012) book “Startup Communities – Building an Entrepreneurial Ecosystem in Your City,” in which he described the way in which the small city of Boulder, Colorado, developed a successful entrepreneurial ecosystem. This book raised awareness among practitioners about the importance of entrepreneurial ecosystems and centered on the notion that ecosystems form around highly interactive communities with common goals. Feld (2012) argued that entrepreneurs should lead ecosystem development that other actors should provide necessary resources. The story of boulder showed that even small cities can create impactful ecosystems if a dedicated group

2.1 Entrepreneurial Ecosystems

15

of experienced entrepreneurs and investors focus on building an integrative community that reaches out to various other actors from the start.

Policy

Markets

Finance

Entrepreneurial Ecosystem Human Capital

Culture

Supports

Figure 2: Isenberg's Entrepreneurial Ecosystem Model Adapted from Isenberg (2011)

Organizations such as the World Economic Forum (Drexler et al., 2014), the Kauffman Foundation (Motoyama, Konczal, Bell-Masterson, & Morelix, 2014), and the Organization for Economic Cooperation and Development (Mason & Brown, 2014) further stimulated the discussion of entrepreneurial ecosystems as a viable framework for regional economic development. This led to more examination of why certain regions show higher numbers of high-growth startups than others. The fact that such large pubic organizations took concrete action to investigate entrepreneurial ecosystems was a clear signal of growing societal interest in the topic. Hereafter, the number of research publications related to entrepreneurial ecosystems grew rapidly. The following section takes a more comprehensive look at how this new phenomenon of entrepreneurial ecosystems is defined.

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2 Conceptual Background

2.1.2 Definition of Entrepreneurial Ecosystems 2.1.2.1 Conceptual Origin and Early Development The concept of ecosystems originally stems from biology. An ecosystem is defined as “a biotic community, encompassing its physical environment, and all the interactions possible in the complex of living and nonliving components” (Tansley, 1935, p. 299). In recent decades, several other disciplines began to use this biological concept to describe complex communities or interconnected systems, such as urban ecosystems (Bolund & Hunhammer, 1999). In business literature, ecosystems are commonly defined as an “alignment structure of the multilateral set of partners that need to interact in order for a focal value proposition to materialize” (Adner, 2017, p. 42). Alignment structures are variable and depend on how ecosystem participants are involved in certain roles and resource flows. Jacobides, Cennamo, and Gawer (2018) extended this definition with an emphasis on ecosystems not being hierarchically controlled, with complementarities that are specific and multi-sided: “An ecosystem is a set of actors with varying degrees of multilateral, non-generic complementarities that are not fully hierarchically controlled” (p. 2264). Valdez (1988) was the first scholar to apply the concept of ecosystems in the context of entrepreneurship. In his paper “The Entrepreneurial Ecosystem: Toward a Theory of New Business Formation,” he stated, “The ecosystem framework for viewing the formation or startup of new businesses contains two dynamic elements: the entrepreneur (or more accurately, the would-be entrepreneur) and the entrepreneurial environment” (Valdez, 1988, p. 102). It is clear that he saw both individual entrepreneurs and environmental factors as equally important. He further noted that the entrepreneurial environment consists of a number of factors, such as the activities of venture capital and the availability of a skilled labor force, that reflect “the environment as a pool of resources which the entrepreneur selects and acquires to establish the new venture” (Valdez, 1988, p. 103). As seen in his explanation, his view of entrepreneurial ecosystems accords closely with the current basic scholarly understanding of entrepreneurial ecosystems. Despite this fact, Valdez’s pioneering work on entrepreneurial ecosystems did not capture scholarly attention at that time. Instead, most researchers argue that Moore (1993) is the first person to introduce the ecosystem concept to business literature. According to Moore, “business ecosystems condense out of the original swirl of capital, customer interest, and talent generated by a new innovation, just as successful species spring from the natural resources of sunlight, water, and soil nutrients” (Moore, 1993, p. 76). A few years after Moore (1993), Spilling (1996) analyzed entrepreneurial systems and provided a definition that is close to today’s definitions of entrepreneurial ecosystems

2.1 Entrepreneurial Ecosystems

17

with regional boundaries and diverse interconnected actors: “The entrepreneurial system consists of a complexity and diversity of actors, roles, and environmental factors that interact to determine the entrepreneurial performance of a region or locality” (p. 91). Cohen (2005) reintroduced the term entrepreneurial ecosystems to describe environmental factors of entrepreneurship and applied the concept to the context of sustainable entrepreneurship. He defined it as “entrepreneurial ecosystems represent a diverse set of inter-dependent actors within a geographic region that influence the formation and eventual trajectory of the entire group of actors and potentially the economy as a whole” (pp. 2-3). While this definition emphasizes the presence of different actors, as do the previous definitions, it also explicitly points towards interdependencies among diverse entities that influence entrepreneurial activities within a regional context. Another novelty of this definition is that it pays particular attention to the evolutionary nature of the phenomenon by using the term “trajectory.” This term entails a time dimension and identifies the dynamic nature of entrepreneurial ecosystems. It took a few more years for the concept to be acknowledged by a wider audience, with the concept finally gaining more traction when Isenberg (2010, p, 3) highlighted a practical relevance of entrepreneurial ecosystems. He defined the concept rather broadly compared to the scholars introduced above: “the entrepreneurship ecosystem consists of a set of individual elements—such as leadership, culture, capital markets, and open-minded customers—that combine in complex ways.” This discussion sparked the interest of other scholars and organizations, such as the Organization for Economic Cooperation and Development and the World Economic Forum. One dimension that was part of early discussions on entrepreneurial ecosystems is the type of entrepreneurship that is referred to in the term (Foster et al., 2013; Mason & Brown, 2014). While entrepreneurship generally refers to the exploration and exploitation of business opportunities (Freiling, 2009; Shane & Venkataraman, 2000), the degree of innovativeness and growth orientation explains two types of entrepreneurship with different goals and challenges. On the one side, there is small business entrepreneurship, which involves the development of small, sustainable businesses that serve local or regional markets with traditional, well-known business ideas. On the other side, there are high-growth startups, which aim to serve global markets and build competitive advantage through innovation (Aulet & Murray, 2013). These two types of entrepreneurship are entirely different in numerous regards, including their nature and economic outcomes and the risks involved in the business development process. Therefore, entrepreneurship scholars have increasingly emphasized the importance of differentiating these two distinctive types in

18

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investigating entrepreneurial activities and entrepreneurial ecosystems (Henrekson & Sanandaji, 2014; Mason & Brown, 2013; Shane, 2009; Stam, Suddle, Hessels, & van Stel, 2009). Traditional small businesses and innovative, growth-oriented startups face different challenges in developing their business and accordingly have different needs regarding support. In other words, actors and organizations that are important to traditional small businesses are not necessarily critical to innovative startups, and vice versa, even when they are all located in the same geographical location. Due to the necessity of rapid growth, the reliance of the firm on technology, and intense competition on a global scale, startup entrepreneurs must make use of distinctive types of networks, resources, and learning opportunities that other types of businesses do not need (Aulet & Murray, 2013). One example that can demonstrate the differences between these two types of entrepreneurial agents is their financial needs. While traditional small businesses predominantly rely on loans from banks for financing, innovative and growth-oriented startups primarily seek equity financing from business angels or venture capitalists (VC). This is simply because startups pursue the development of innovative products and services, which are new to the market, and their activities therefore entail high risk. In recent publications on entrepreneurial ecosystems, scholars have predominantly focused on the innovative and growth-oriented type of entrepreneurship and have developed their arguments based on the assumption that the creation of these startups should be fostered within regions, as they make significant economic contributions to their regions (Haltiwanger, Jarmin, & Miranda, 2013; Henrekson & Johansson, 2010; Henrekson & Sanandaji, 2014; Wong, Ho, & Autio, 2005). 2.1.2.2 Popular Definitions of Entrepreneurial Ecosystems Among the various early publications on entrepreneurial ecosystems, three notable definitions were developed. All originating in 2014, these definitions are the most widely used in current academic discussion and are therefore further analyzed to better understand the conceptual roots of entrepreneurial ecosystems. The first popular definition in the literature was introduced by Stam (2014). He created a broad definition of entrepreneurial ecosystems that is frequently used in other publications: “An entrepreneurial ecosystem is an interdependent set of actors that is governed in such a way that it enables entrepreneurial action” (Stam, 2014, p. 2). The definition is close to that provided by Cohen (2005), who defined the entrepreneurial ecosystem as “a set of interdependent components that interact to generate new venture creation” (p. 3). By referring to components instead of actors, Cohen’s (2005) definition offers a larger scope to include non-human factors, such as culture.

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The strength of Stam’s (2014) definition lies in its simplicity, and its focus on the most critical part of the ecosystem—the interdependency of actors—makes it widely applicable. However, this simplicity contributes to the weakness of the definition, as it omits the regional dimension and several important components and factors that influence ecosystems. Furthermore, it fails to address the question of how these actors enable entrepreneurship, and it fails to mention what resources may be relevant to new venture creation and how these resources are created and facilitated within an entrepreneurial ecosystem. Another weakness is the missing consideration of institutional environments and how it influences the dynamics of entrepreneurial ecosystems. Stam (2014) mentioned that the interdependent set of actors is governed but did not explain how this governance takes place. The complexity of the interdependencies and the processes behind the entire phenomenon and its spatial component are left out. Despite these weaknesses, Stam’s (2014) definition has thus far remained one of the most popular in the literature. Stam and Spigel (2016) later improved the definition by adding the general term “factors” in order to include other ecosystem components such as resources. Furthermore, they added a spatial component and defined an entrepreneurial ecosystem “as a set of interdependent actors and factors coordinated in such a way that they enable productive entrepreneurship within a particular territory” (Stam & Spigel, 2016, p. 1). In terms of content, this definition is rather close that of Spilling (1996), mentioned above, who referred to diverse actors and environmental factors that interact with each other and realize successful entrepreneurship in a region. The second popular definition in the literature was introduced by Mason and Brown (2014). In contrast to Stam (2014), Mason and Brown (2014) attempted to be more precise, developing a more comprehensive definition of entrepreneurial ecosystems as “a set of interconnected entrepreneurial actors (both potential and existing), entrepreneurial organizations (e.g., firms, venture capitalists, business angels, banks), institutions (universities, public sector agencies, financial bodies), and entrepreneurial processes (e.g., the business birth rate, numbers of high growth firms, levels of ‘blockbuster entrepreneurship,’ number of serial entrepreneurs, degree of sell-out mentality within firms and levels of entrepreneurial ambition) which formally and informally coalesce to connect, mediate and govern the performance within the local entrepreneurial environment” (Mason & Brown 2014, p. 5). Compared to Stam’s (2014) definition, comprehensiveness is the evident strength of that developed by Mason and Brown (2014). However, the terms they use, with additional explanations in brackets, can lead to more questions than answers. For instance, they distinguished between financial capital providers and “financial bodies” and even sorted them under different umbrella terms, with financial capital providers named under organizations and “financial bodies” sorted

20

2 Conceptual Background

under the umbrella term “institutions”. Another characteristic of this definition is its use of some new terms commonly employed in the startup scene but not yet in academia. Terms such as “blockbuster entrepreneurship” are not theoretically founded and might lead confusion to the reader, as the phenomena that they describe are not precisely delineated or clear to everyone. Furthermore, it is questionable whether the application of statistical information, such as the number of high-growth firms or the number of serial entrepreneurs, is an appropriate way to understand entrepreneurial processes, since these numbers offer a rather static result and do not include the components of dynamic processes. The definition of Mason and Brown (2014) does not consider the legal environment or the region’s entrepreneurial culture, though other researchers have declared this to be vital (e.g., Isenberg, 2011; Saxenian, 1994). Culture is only indirectly touched on, when talking about the mentality and ambition of entrepreneurs. Mason and Brown’s (2014) definition ends by proposing that all described ecosystems factors produce and govern “the performance within the local entrepreneurial environment.” However, the authors failed to explain what kind of performance is meant here. Apart from the lack of consideration of the entrepreneurial culture, Mason and Brown (2014) furthermore did not pay sufficient attention to the resource perspective, although resources and their exchange are the glue that connects different types of actors and the fuel that propels the growth of entrepreneurial ecosystems. Despite its weaknesses, however, it is worth acknowledging that Mason and Brown (2014) definition has guided more recent research by specifying the diverse actors within entrepreneurial ecosystems. The third popular definition was developed by Ács, Autio, and Szerb (2014), who defined a national system of entrepreneurship as “the dynamic, institutionally embedded interaction between entrepreneurial attitudes, ability, and aspirations, by individuals, which drives the allocation of resources through the creation and operation of new ventures” (Ács, Autio, & Szerb 2014, p. 479). One reason for the popularity of this definition among academic scholars is its well-consolidated conciseness. Compared to the definitions of Stam (2014) and Mason and Brown (2014), the definition of Ács et al. (2014) clearly addresses the institutional embeddedness of interactions between actors and organizations within the system while at the same time emphasizing the cultural component in terms of attitudes, abilities, and aspirations. Moreover, Ács et al. (2014) addressed the resource perspective by focusing on how resources are allocated through entrepreneurial activities. This short definition encompasses entrepreneurial interaction, resource allocation, and institutions in a compact and efficient manner. The weakness of this definition lies, however, in its orientation to national systems. Unlike the majority of scholars, who understand entrepreneurial ecosystems as interdependent factors on a regional level, they used nations as the unit of the system that fosters entrepreneurial activities. Thus, this definition does not directly consider the regional

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aspect of entrepreneurial ecosystems and its implications on localized dynamics. Still, this definition is applicable to entrepreneurial ecosystems on the regional level to a certain extent, since both national and regional entrepreneurial ecosystems involve similar actors and factors, such as political actors and investors. It is no surprise that they have similar ecosystem components, since the national system can be understood as an aggregation of numerous regional ecosystems. Table 2 shows a summary of the three dominant definitions of entrepreneurial ecosystems. Table 2: Three Popular Definitions of Entrepreneurial Ecosystems

Definition

Authors

Year

Page

“An entrepreneurial ecosystem is an interdependent set of actors that is governed in such a way that it enables entrepreneurial action”

Stam

2014

2

“a set of interconnected entrepreneurial actors (both potential and existing), entrepreneurial organizations (e.g., firms, venture capitalists, business angels, banks), institutions (universities, public sector agencies, financial bodies), and entrepreneurial processes (e.g., the business birth rate, numbers of high growth firms, levels of ‘blockbuster entrepreneurship’, number of serial entrepreneurs, degree of sell-out mentality within firms and levels of entrepreneurial ambition) which formally and informally coalesce to connect, mediate and govern the performance within the local entrepreneurial environment”

Mason and Brown

2014

5

“the dynamic, institutionally embedded interaction between entrepreneurial attitudes, ability, and aspirations, by individuals, which drives the allocation of resources through the creation and operation of new ventures”

Ács al.

2014

479

et

2.1.2.3 Consolidating the Definition of Entrepreneurial Ecosystems While all the three definitions argue for the importance of interdependencies and a diverse set of actors or individuals who are linked to entrepreneurial processes, only the definition of Mason and Brown (2014) highlights the role of local

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2 Conceptual Background

entrepreneurial environments as enablers or constraints for startup activities in their particular region. Interestingly, while various researchers have highlighted the evolutionary perspective of entrepreneurial ecosystems (Subrahmanya, 2017; Colombelli et al., 2019; Mack & Mayer, 2016; Motoyama & Knowlton, 2017; Spigel & Harrison, 2018), all popular definitions fail to explicitly integrate evolutionary elements into their definition as an important factor influencing the process of entrepreneurial ecosystems. The evolutionary nature of entrepreneurial ecosystems naturally entails non-linear dynamic interactions among various actors: As actors and their roles within an ecosystem continuously change, so do the relationships among them. Therefore, the nature and process of entrepreneurial ecosystems cannot be explained by simple aggregations of ecosystem components. To understand this complex nature requires scholars to pay more attention to the evolutionary aspect. Table 3: Strengths of Discussed Definitions of Entrepreneurial Ecosystems

Criteria Dynamic Driven by interactions Institutionally embedded Resource allocation Evolutionary nature Various actors Entrepreneurship at center Complex systems Open systems Idiosyncratic structures Regional context

Stam (2014)

Mason & Brown (2014)

X

X X

Ács et al. (2014) X X X X

X X

X X

X

Spigel & Harrison (2018) X X X X X X

X X

Acknowledging the importance of evolutionary perspectives, a few recent scholars have made critical reflections and attempted to overcome some weaknesses of the major definitions presented above by developing alternative definitions of entrepreneurial ecosystems. Among others, Spigel and Harrison (2018) made notable contributions by arguing that entrepreneurial ecosystems can be seen “as ongoing processes through which resources develop within an ecosystem, flow between entrepreneurs and other actors, and create or attract more resources over time, changing the overall structure of the ecosystem” (p. 164). They further argued that

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the availability of strong entrepreneurial resources, as well as the structure that facilitate well-functioning resource flows, are critical factors to the creation of innovative and growth-oriented startups, and eventually to the resilience of entrepreneurial ecosystems. On the one hand, this definition successfully captures the process-driven and evolutionary nature of entrepreneurial ecosystems. On the other hand, interdependencies, which are one of the most prominent elements in earlier definitions, are only indirectly included, in the notion of the creation and flow of resources between actors. The flow of resources implies that distinct resource facilitation processes are at the center of ecosystem development, and these facilitation mechanisms orchestrate resources that are either created or acquired from outside. While this definition made a significant step towards integrating a dynamic perspective into definitions of entrepreneurial ecosystems, its compactness ignores the spatial component of and the overall purpose of the development and flow of resources within entrepreneurial ecosystems. The criteria of previous definitions of entrepreneurial ecosystems, which are discussed in this chapter, are summarized in Table 3. As shown above, there is no single definition that captures the complete nature of entrepreneurial ecosystems. Therefore, the definitions of Ács et al. (2014, p. 479) and Spigel and Harrison (2018, p. 164) are combined, altered, and extended, incorporating the components of complexity and geographically bounded but open systems to reflect the understanding of entrepreneurial ecosystems within this study: Entrepreneurial ecosystems are the dynamic, institutionally embedded interactions among entrepreneurial attitudes, ability, and aspirations, driving the allocation of resources from various actors through the formation and operation of new ventures and thereby creating or attracting more resources over time, constantly changing the complex and idiosyncratic structure of the geographically bounded but open system. This definition overcomes the weaknesses of the other definitions and contains multiple dimensions of entrepreneurial ecosystems such as actors and resources, processes such as dynamic interactions and resource creation, and the institutional embeddedness that captures the influence of culture. It furthermore considers the complex structure and evolutionary nature of this regional phenomenon by considering open but distinct boundaries. 2.1.3 Antecedents and Related Concepts While it was only recently that entrepreneurship and management scholars began to engage in intensive discussions on entrepreneurial ecosystems, the concept emerged in the intersection of several conceptual antecedents, such as clusters (e.g., Gilbert, McDougall, & Audretsch, 2008; Martin & Sunley, 2003; Porter, 2000), regional innovation systems (e.g., Asheim & Isaksen, 2002; Asheim,

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Smith, & Oughton, 2011; Cooke, 2001; Cooke, Uranga, & Etxebarria, 1997), business ecosystems (e.g., Adner, 2017; Adner & Kapoor, 2010; Iansiti & Levien, 2004; Williamson & De Meyer, 2012), industrial parks (e.g., Côté & Hall, 1995; Gibbs & Deutz, 2005; Lambert & Boons, 2002), and regional networks (e.g., Almeida & Kogut, 1999; Saxenian, 1990; Sotarauta, 2010). It is critical for this study to review these research fields relevant to entrepreneurial ecosystems for two reasons. First, research on these concepts has a longer history than research on entrepreneurial ecosystems, which allows the literature to provide extensive background knowledge on the conceptual forebears of entrepreneurial ecosystems. Mobilizing such knowledge requires scholars to critically reflect on its applicability, necessary due to the differences between antecedent concepts and entrepreneurial ecosystems. However, the literature on the conceptual antecedents of entrepreneurial ecosystems offers extensive empirical and theoretical insights. Second, it is essential to thoughtfully argue how the concept of entrepreneurial ecosystems is different from the similar concepts that preceded it to delimit the scope and boundary of this newly emerging concept. This study selects three entrepreneurial ecosystem antecedents to provide a better understanding of the roots and peculiarities of the entrepreneurial ecosystem concept. First, there is a long tradition of research on regional development (Acs et al., 2017; Stam & Spigel, 2017). Recently, the concepts of clusters and regional innovation systems have received particular scholarly attention to better understand how regional economies can be strengthened. Second, strategic management scholars introduced the concept of the business ecosystem to explain the complex interdependencies of firms’ stakeholders and how firms manage and derive value from them (Acs et al., 2017; Adner & Kapoor, 2010; Iansiti & Levien, 2004; Williamson & De Meyer, 2012). There are similarities between these concepts, such as the central assumption that important parts of a firm’s competitive advantage reside in the firm’s connections to regional actors and resources rather than solely within the individual firm (Asheim, Boschma, & Cooke, 2011; Porter, 2000). However, there are important differences, such as the research focus and the application of the concept in literature. While the literature on clusters and regional innovations systems focuses on regional development, the concept of the business ecosystem was introduced by strategic management literature to analyze interdependencies of businesses with their partners. One example of a business ecosystem is the iPhone of Apple, which is not only produced by involving different partners but also provides other firms with a platform to sell their apps, creating a business ecosystem governed by Apple (Gómez-Uranga, Miguel, & Zabala-Iturriagagoitia, 2014).

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Table 4: Summary of Entrepreneurial Ecosystem Antecedents

Clusters Key actors

Firms from the same industry

Spatial boundaries Value created through

Local

Key outcome

Agglomeration and spillover effects Competitiveness of local industry

Regional Innovation Systems Universities, innovative firms and government Regional

Business Ecosystems One dominant firm and its partners Global

Knowledge innovation

Organization of stakeholders

Innovation

and

Alignment of partners for business growth

Although each of the concepts has its own peculiarities and fields of use, they share the conviction that there are factors outside the boundaries of a firm that contribute to the competitiveness of startups. To delineate entrepreneurial ecosystem research from its most prominent ancestors and to carve out its own unique attributes, the following section briefly reviews research on clusters, regional innovation systems, and business ecosystems. Table 4 summarizes the three antecedents of entrepreneurial ecosystems. 2.1.3.1 Clusters Regional economic development has a long history of research. Marshall (1920), for instance, examined industrial concentrations in Victorian England, identifying so-called agglomeration economies which are associated with the local division of industry and labor and the community of firms and individuals in regional economies. The interaction among these different actors is considered to take place with the common goal of gaining competitive advantage in international markets (Becattini, 1990; Marshall, 1920). This interest in regional concentration of certain specialized industries was rediscovered in the 1990s, when cluster research started to examine the benefits firms derived from sector specialization in certain regions (Martin & Sunley, 2003; Porter, 2000). Porter (1990) was the first to introduce the concept of clusters, explaining them as the “geographic concentrations of interconnected companies, specialized suppliers, service providers, firms in related industries, and associated institutions [ . . . ] in particular fields that compete but also cooperate” (Porter, 1998, p. 197). Porter

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claimed that business activities are deeply rooted in social environments. This social embeddedness functions as a glue for clusters and drives their cohesion. He further argued that clusters increase the competitive advantages of firms that are located in clusters in the following ways: i) by increasing their productivity; ii) by accelerating innovation in their industries; and iii) by stimulating the formation of new business in the respective industries. The new firms profit from the cluster in two ways. First, they have access to a large pool of talented and trained workers that were attracted by the existing firms within the cluster (Glaeser & Kerr, 2009). Second, they profit from existing capabilities, knowledge, and innovation within the cluster, with knowledge spreading due to knowledge spillovers from other organizations such as universities and corporations (Gilbert et al., 2008; Iammarino & McCann, 2006). The notion of entrepreneurial ecosystems essentially draws on three concepts of cluster theory: i) the agglomeration of firms helps entrepreneurs build their networks with other actors. ii) the agglomeration of firms helps to create and process knowledge through interaction with other firms. iii) clusters emphasize that networking and knowledge exchange between actors strengthen their competitive advantages. However, there are clear differences between clusters and entrepreneurial ecosystems. While the literature on clusters argues that firms benefit from being in the same regional context as other firms of the same industry, the focus in entrepreneurial ecosystem literature resides less on the homogeneity of products, supply chains, and customers than on the use of similar distinctive startup processes (Spigel, 2017). Due to its focus on a particular industry, discussions on clusters predominantly deal with intra-industry assets and technical synergies and therefore predominantly address such topics as production systems, industry-related learning, and incremental innovation. By contrast, scholars use the notion of entrepreneurial ecosystems to describe how structural elements and externalities are organized around the entrepreneurial process of opportunity discovery, pursuit and the scaling of new ventures (Acs, Estrin, Mickiewicz, & Szerb, 2018; Autio, Nambisan, Thomas, & Wright, 2018). In other words, the concept of clusters deals with a single industrial setting, which makes the scope of research in this area rather limited compared to research on entrepreneurial ecosystems. Another difference between clusters and entrepreneurial ecosystems is related to the resource dimension, such as the knowledge that is primarily considered in the respective fields. For entrepreneurial ecosystems, the knowledge that is closely related to the entrepreneurial process is the primary research objective (Spigel &

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Harrison, 2018; Stam, 2014). The examples of such knowledge are the design of innovative business models, the acquisition of initial customers, the ways to overcome liabilities of newness, and the strategies to enable exponential growth. The shared knowledge base within entrepreneurial ecosystems is therefore closely related to the specific challenges of entrepreneurs, in contrast to the best practices in specific industries that clusters provide (Stam & Spigel, 2017). Autio et al. (2018) suggested that the concept of entrepreneurial ecosystems differs from clusters in two additional ways. The first difference that characterizes entrepreneurial ecosystems is related to the voluntary horizontal knowledge-spillovers between different actors and industries. He argued that entrepreneurial ecosystems facilitate inter-industry flows of knowledge among actors. The second characteristic is the exploitation of digital affordances, referring to non-local knowledge spillovers between different entrepreneurial ecosystems supported by digital infrastructures, such as the internet. While research on entrepreneurial ecosystems centers dynamic interactions among actors from different industrial backgrounds, organized around the allocation of resources that foster entrepreneurial processes, cluster research focuses on co-specialized inter-industry cooperation organized around shared needs, specific resources, and common goals (Acs et al., 2017; Autio et al., 2018). 2.1.3.2 Regional Innovation Systems While the literature on clusters focuses on effects specific to the agglomeration of industries, research on regional innovation systems focuses on how actor networks drive innovation within a region. Regional innovation systems are understood as institutionalized networks that connect the creators of knowledge, such as research institutes or universities, with regional firms to facilitate spillover effects (Asheim & Isaksen, 2002; Cooke, 2001). Furthermore, Cooke et al. (1997) introduced an evolutionary perspective to describe the constant evolution of regional innovation systems. As the term suggests, the concept of regional innovation systems can be divided into three conceptual components: region, innovation, and system (Cooke et al., 1997). The regional perspective is important, as knowledge, networks, and skilled workers tend to flow within certain spatial boundaries, especially around organizations such as universities that ensure the sustainable replenishment of these innovation-related resources. This already implies that the second component – innovation – is not created within innovative firms, but that these firms rely on the knowledge output of large external organizations such as universities or research labs. By combining the knowledge output of different organizations, novel knowledge is generated to drive innovation (Cooke, 2001). The third component

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is the system is the interconnectedness and interdependencies of the different elements within regional innovation systems that intertwine such that they create a virtuous cycle of innovation (Doloreux & Parto, 2005). The entrepreneurial concept builds on three principles of regional innovation systems: the existence of anchoring in regional networks, an emphasis on organizations that build regional human capital, a facilitating role of governments: i) The literature on regional innovation systems emphasizes the importance of networks that are embedded in the regional socio-economic context (Christopherson & Clark, 2007). Similar to the concept of regional innovation systems, the scholars on entrepreneurial ecosystems understand networks as the driver of collaborative learning and resource exchanges within entrepreneurial ecosystems that subsequently yield innovation. ii) The concept of entrepreneurial ecosystems draws from the emphasis placed in regional innovation systems on universities, research labs, and other vital organizations that contribute to the enhancement of human capital and the production of knowledge and innovation output (Huffman & Quigley, 2002). These organizations also play a vital role in entrepreneurial ecosystems, as they attract well-educated employees and train new generations of entrepreneurs. iii) The literature on regional innovation systems highlights the role of governments in creating a supportive environment that breeds innovation. The overall institutional environment and public investments can help produce the conditions under which innovation occurs (Asheim, Coenen, & Vang, 2007). Within entrepreneurial ecosystems, governmental agencies occupy a similar role, as a supportive actor that helps develop innovation. As in entrepreneurial ecosystem research, entrepreneurship also plays an important role in the regional innovation system literature. As Hekkert et al. (2007, p. 421.) state, “there is no such thing as an innovations system without entrepreneurs.” However, the type of entrepreneurs considered in the concept of the regional innovation system is distinct from that in entrepreneurial ecosystems. Regional innovation system research primarily focuses on the performance of innovative firms and the role of national governments, with entrepreneur regarded as a mere part of the overall puzzle among other actors. By contrast, entrepreneurial ecosystem research takes a different approach, placing its emphasis on the entrepreneurial process as the focal point of analysis and specifically systematizing the whole concept, with all its different elements, around it (Spigel & Harrison, 2018). This focus on entrepreneurship and the subsequent growth of startups leads to overall value creation through innovation. The dynamics of entrepreneurial ecosystems are driven by successful ventures, which can establish virtuous cycles of resource creation and resource flow among actors, leading to multiplication effects (Spigel & Harrison, 2018). Entrepreneurial processes are therefore not only an

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essential input factor of entrepreneurial ecosystems but also the output that functioning entrepreneurial ecosystems produce (Brown & Mason, 2017). 2.1.3.3 Business Ecosystems While the concepts of clusters and regional innovation systems are closely linked to regional development literature, a business ecosystem is a concept that emerged in strategic management literature. The concept was initially introduced by Moore (1993), who defined it as “an economic community supported by a foundation of interacting organizations and individuals – the organisms of the business world. This economic community produces goods and services of value to customers, who are themselves members of the ecosystem. The member organism also includes suppliers, lead producers, competitors, and other stakeholders. Over time, they co-evolve their capabilities and roles and tend to align themselves with the direction set by one or more central companies. Those companies holding leadership roles may change over time, but the function of ecosystem leader is valued by the community because it enables members to move toward shared visions to align their investments, and to find mutually supportive roles” (Moore, 1993, p. 26). As seen in this definition, the core of the business ecosystem concept is that firms are dependent on different external actors who create complementary services and products (Adner & Kapoor, 2010; Iansiti & Levien, 2004; Williamson & De Meyer, 2012). The business ecosystem concept highlights the necessity to align partners as a new dimension in competitive and corporate strategy (Adner, 2017). Furthermore, the concept implies that there are certain firms that govern business ecosystems due to their central role. As it is necessary to manage stakeholder interaction and interdependencies, firms are constantly shaping the business ecosystem and the perception of the actors involved (Autio & Thomas, 2018). The concept of entrepreneurial ecosystems draws essentially on two important principles from business ecosystems: i) Both emphasize interdependencies and interaction as determinants of an ecosystem. ii) Both are treated not as static concepts but as constantly evolving systems with strong dynamics that emerge from the business processes and the interactions of their stakeholders. However, there are essential differences between both concepts, particularly regarding the role of actors, processes, and spatial boundaries. Business ecosystems focus on creating and capturing value in one focal firm, which takes a leading role within a global ecosystem of stakeholders, such as suppliers and customers. All

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processes are either initiated from this focal firm or are oriented towards it. The idea of entrepreneurial ecosystems, however, focuses on the entrepreneurial process within regional boundaries, with all entrepreneurs serving as the focal actors who drive the ecosystem evolution, and establishing high-growth firms as the primal output of entrepreneurial ecosystems (Spigel, 2017). The critical difference between the literature on clusters, regional innovation systems, and business ecosystems and that on entrepreneurial ecosystems is that the former concepts treat the role of entrepreneurship as a minor issue within their conceptual foundations (Pitelis, 2012; Stam & Spigel, 2017). In cluster research, agglomerations of the same or similar industries lead to increased competitive advantage of firms within the cluster (Porter, 1998). Regional innovation systems seek to create value from knowledge and innovation (Autio & Thomas, 2014). Finally, in business ecosystems, a focal firm must organize its stakeholders to increase the captured value (Iansiti & Levien, 2004). However, entrepreneurial ecosystems are driven by the interaction of diverse entrepreneurial actors that allocate resources to create and operate new high-growth startups (Ács et al., 2014; Brown & Mason, 2017). 2.1.4 Conceptualization of Entrepreneurial Ecosystems This section outlines the conceptualization of entrepreneurial ecosystems. Section 2.1.4 outlines the nature of entrepreneurial ecosystems in terms of three distinct aspects. The first deals with the components of the entrepreneurial ecosystem and their configuration (Section 2.1.4.1). Extant literature has developed a few conceptual models of entrepreneurial ecosystems and identified several critical ecosystem attributes. The review of existing conceptual models allows this study to highlight the essential components of entrepreneurial ecosystems. The second aspect is the evolutionary nature of entrepreneurial ecosystems. While many of the dominant definitions of entrepreneurial ecosystems do not explicitly address their evolutionary nature, few studies do. By critically reviewing these articles, Section 2.1.4.2 highlights several aspects that are essential to understanding the evolutionary nature of entrepreneurial ecosystems. Closely related to the evolutionary aspect, this study illuminates the process dimension of entrepreneurial ecosystems and reviews studies of several scholars that clarify the development of entrepreneurial ecosystems as a process. The final aspect is the system of entrepreneurial ecosystems (Section 2.1.4.3). Relying on the theory of complex adaptive systems (Fuller & Moran, 2001; Rickles, Hawe, & Shiell, 2007; Roundy et al., 2018; Surana, Kumara, Greaves, & Raghavan, 2007), this study understands entrepreneurial ecosystems as a particular type of system, characterized by non-linear dynamic interactions, heterogeneous stakeholders, open but distinct boundaries, and emergent behavior. Figure 3 presents the structure of Section 2.1.4.

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As is customary in academic research, scholars have attempted to find patterns in diverse entrepreneurial ecosystems to establish general theories. Arguments for homogeneity among entrepreneurial ecosystems were first forwarded by early contributors who are mostly policymakers, practitioners, or applied scientists, all of whom value the practical application of generated knowledge (Isenberg, 2011; Drexler et al., 2014; Isenberg, 2010; Mason & Brown, 2014; Cohen, 2005). For instance, Isenberg (2010, 2011) argued, on the one hand, that each entrepreneurial ecosystem is unique, while on the other hand proposing a set of six essential domains introduced in Section 2.1.1 (Figure 2). Breaking the concept down into six fundamental domains implies that an entrepreneurial ecosystem simply needs to develop these domains in order to advance. As a result, policymakers often undervalue the complex dynamics within entrepreneurial ecosystems and how the delineated multi-faceted parts coalescence through idiosyncratic configurations (Baron & Freiling, 2019; Roundy et al., 2018; Spigel, 2017). Instead, they are primarily interested in the nature of the particular components that need to be developed to become the “next Silicon Valley.” Spigel and Harrison (2018) sharply criticized past conceptual work on entrepreneurial ecosystems for merely presenting “a laundry list of factors and characteristics with no reasoning about cause and effect nor of how they cohere” (p. 158). In fact, most authors of recent publications emphasized the heterogeneous nature of entrepreneurial ecosystems and the idiosyncratic configurations of individual ecosystems (Spigel & Harrison, 2018; Zacharakis, Shepherd, & Coombs, 2003; Brown & Mason, 2017; Spigel, 2017; Baron & Freiling, 2019). To understand the characteristics of entrepreneurial ecosystems, it is essential to take a closer look at recent conceptual work. Therefore, this section critically reviews the literature on entrepreneurial ecosystems to explore relevant dimensions of the concept. The congruent identification of ecosystem components helps to level the ground for consistent argumentation in the literature regarding what factors are worth being considered when describing an entrepreneurial ecosystem. Although there are no consistent criteria for how to identify factors, scholars have agreed that certain components are beneficial for entrepreneurial ecosystems, such as a supportive culture, universities and research labs, large corporations, financial capital, business networks, support organizations, and public policy, all of which incentivize and support startup creation (Bala Subrahmanya, 2017; Mason & Brown, 2014; Spigel, 2017; Stam, 2014). Scholars assume that these attributes, which are embedded in regional contexts, facilitate local startup creation and growth by increasing the competitiveness of startups (Spigel, 2017).

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Entrepreneurial Ecosystems

Section 2.1.4.1

Section 2.1.4.2

Evolutionary Nature

Components and Configuration (E.g., Cohen, 2005; Iseberg, 2010; Feld, 2012) • Interrelated components on three layers (Spigel, 2017) • Material • Social • Cultural

(E.g, Mack & Mayer, 2016; Brown & Mason, 2017; Colombelli et al., 2017) • Constant evolution • Interactions among actors as an evolution driver • Transition of the governance structure from hierarchical to heterarchical

Section 2.1.4.3

Complex Adaptive Systems (E.g., Roundy et al., 2018) • Emergence through self-organization • Open but distinct boundaries • Complex components • Non-linear dynamics • Adaptability through dynamic interactions • Sensitivity to initial conditions

Figure 3: Critical Aspects of Entrepreneurial Ecosystems

Another characteristic of entrepreneurial ecosystems is that they are not closed systems that operate independently of national and global circumstances but rather open systems that facilitate continuous inward and outward resource flow (Malecki, 2018; Roundy et al., 2018; Spigel & Harrison, 2018). Therefore, it is essential to consider what role entrepreneurial actors who are situated outside of entrepreneurial ecosystems might play in the development and emergence of entrepreneurial ecosystems and how they interact with entrepreneurs in entrepreneurial ecosystems. Literature indicates the presence of influential actors who can create resource flows between entrepreneurial ecosystems, such as transnational entrepreneurs and VCs (Drori, Honig, & Wright, 2009; Lerner, 2010; Mason, Cooper, & Harrison, 2002). Transnational entrepreneurs migrate from one location to another, often more vibrant, ecosystem. In well-known entrepreneurial ecosystems, such as Silicon Valley or Berlin, migrants represent almost half of all founders (Baron & Harima, 2019; Genome, 2017; Saxenian, 2002). The process of

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migration requires a considerable amount of time and capital, and highly qualified migrant entrepreneurs often choose an attractive location in which a well-functioning entrepreneurial ecosystem is available. The expected gains from such entrepreneurial ecosystems must be more substantial than the cost of migration. Consequently, ecosystems in different regions must compete to attract more global talent. Despite the importance, scholars have not fully paid their attention to the interconnectedness of entrepreneurial ecosystems and how this can contribute to building unique resource structures that strengthen competitiveness. More recent publications consistently referred to entrepreneurial ecosystems as being highly variegated phenomena (Roundy et al., 2018; Spigel, 2017; Spigel & Harrison, 2018), whose multilateral configurations of physical, institutional, and relational characteristics facilitate the entrepreneurial processes that lend explanatory power to the concept of entrepreneurial ecosystems (Brown & Mason, 2017; Spigel, 2017). 2.1.4.1 Components of Entrepreneurial Ecosystems and Their Configuration Early research on entrepreneurial ecosystems developed primarily descriptive concepts. Therefore, many of the conceptual frameworks developed in the last years have consisted of long lists of actors and other relevant factors without clear reasoning of cause and effect (Cohen, 2005; Foster et al., 2013; Isenberg, 2011; Mason & Brown, 2014). The primary contribution of early studies was to identify similar sets of components that constitute entrepreneurial ecosystems (Table 5). While these early conceptualizations do offer some clarification about the phenomenon, they generally fail to provide a coherent and consistent explanation of the interdependent effects that internal dynamics have on startups within the boundaries of a region (Stam, 2015). One of the first researchers to develop a more holistic approach to the conceptualization of entrepreneurial ecosystems was Spigel (2017). His framework is composed of eleven interrelated ecosystem components, which he called attributes. Each attribute is derived from literature and classified under three different layers: material, social, and cultural (Table 6).

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Table 5: Previous Research that Identified Ecosystem Components

Publication Valdez (1988)

Bahrami and Evans (1995) Cohen (2005)

Identified Components of Entrepreneurial Ecosystems Venture capital, experienced entrepreneurs, technically skilled labor force, suppliers, customers, governmental policies, universities, land or facilities, transportation, receptive population, supporting services, attractive living conditions Universities and research institutes, venture capital, Support infrastructure, entepreneurial spirit, lead users, talent pool

Isenberg (2011)

Informal network, formal network, university, government, professional and support services, capital services, talent pool Financial capital, success stories, social norms, nongovernment institutions, support professions, infrastructure, educational institutions, labor, networks, early customers, leadership, government

Napier and Hansen (2011)

Investors, established firms, knowledge institutions, service providers, dealmakers, serial entrepreneurs, management teams

Feld (2012)

Entrepreneurs, government, universities, investors, mentors, service providers, large companies, Moral support, financial support, network support, government support, technology support, market support, social support, environmental support

Suresh and Ramraj (2012) Mason and Brown (2014)

Entrepreneurial actors, entrepreneurial resource providers, entrepreneurial connectors, entrepreneurial orientation

Stam (2015)

Network, leadership, finance, talent, knowledge, support service/intermediaries, formal institutions, culture, physical infrastructure, demand

Spigel (2017)

Supportive culture, histories of entrepreneurship, worker talent, investment capital, networks, mentors and role models, policy and governance, universities, support services, physical infrastructure, open markets

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Importantly, Spigel (2017) argued that these attributes do not exist in isolation but rather develop together, mutually influencing each other: “attributes are sustained and reproduced through their relationships with other attributes” (Spigel, 2017, p. 56). Thus, the relationships among the attributes drive the overall entrepreneurial processes that develop and sustain the entrepreneurial ecosystem over time. Spigel (2017) sorted each attribute into three distinct categories that describe different layers of the entrepreneurial ecosystem: (i) material attributes, (ii) social attributes, and (iii) cultural attributes. i) Material attributes are location-bound factors of entrepreneurial ecosystems that have a physical presence, such as an organization, or that are institutionally embedded, such as regional policies. Material attributes either directly or indirectly influence the generation of resources within the entrepreneurial ecosystem. Universities with a physical presence in the entrepreneurial ecosystem, for instance, generate resources such as well-educated human capital. ii) Social attributes are the resources that flow within the entrepreneurial ecosystem among actors. The flow of resources is aided by regional networks, which enable entrepreneurs to access resources; for instance, welleducated students are accessed and employed by startups via their networks. iii) Cultural attributes aid the interplay of material and social attributes and represent societies’ attitudes towards entrepreneurship, such as how risks are perceived or how local success stories shape a positive outlook on entrepreneurial initiatives. These underlying values, norms, and beliefs of the society create social behaviors that, for instance, support entrepreneurial education at universities (material attribute) and the accessibility of students as employees for startups (social attribute). All three layers are connected through overlapping attributes that collectively support the creation and growth of startups. Material attributes facilitate the creation of resources. These resources are accessed through networks and are therefore part of the social attributes, which are therefore reinforced by the material attributes. Cultural attributes support material and social attributes and their interaction. Both, in turn, reinforce cultural attributes by facilitating successful startups, which positively affects the society’s view of entrepreneurship. Figure 4 presents the conceptual model developed by Spigel (2017).

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Table 6: Three Layers of Entrepreneurial Ecosystem Components

Layer Cultural

Social

Attribute Supportive culture Histories of entrepreneurship Worker talent Investment capital Networks

Material

Mentors and role models Policy and governance Universities Support services Physical infrastructure Open markets

Description Positive cultural attitude towards risk-taking, innovation, and startups Examples of successful startups The human capital that is accessible for startups Availability of financial capital for startups Connections between different actors that enables resource flow Successful entrepreneurs that advice entrepreneurs with less experience Public support and regulation that help entrepreneurs Universities provide human capital, knowledge and innovative technology Organizations that sell or provide services to startups Facilities and public infrastructure needed by entrepreneurs Local opportunities and access to national and global markets

Source: Adapted from Spigel (2017)

Spigel (2017) argued that not all presented attributes are necessary building blocks for the development and progression of an entrepreneurial ecosystem, thereby implying that multiple idiosyncratic configurations of entrepreneurial ecosystems are possible. He argued that the important aspect was not the completeness and balance of attributes but the relationships of multiple connected attributes that encourage entrepreneurs to create startups and offer vital resources. The key aspect of this model is that different layers of attributes support and reinforce each other. Cultural attributes support social attributes, which in turn reinforce the cultural attributes. Similarly, the material attributes are supported by social attributes but simultaneously reinforce them. This constant mutual influence and reproduction between layers can be explained by using the example of an accelerator. As an organization that is directed towards supporting entrepreneurs with various resources, accelerators are part of the material attributes. They

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reinforce the social attributes of the ecosystem through their strong involvement in local networks and their generation of mentors and successful entrepreneur and worker talent. The successful entrepreneurs reinforce the cultural attributes through their successful entrepreneurship history, which positively influences the society’s view of startups. This, in turn, supports the social attributes with increased interest of potential worker talent, which begins to contribute to local networks. Strong and active local networks, in turn, support accelerators in their processes and increase the number of potential participants. Relationships among Ecosystem Attributes

Supports Reenforces Policies

Material Attributes

Universities Infrastructure Open markets Support services

Social Attributes

Cultural Attributes

Networks

Worker talent

Mentors and role models

Investment capital

Supportive culture

Histories of entrepreneurship

Figure 4: Relationships Among Ecosystem Attributes Source: Spigel (2017)

Spigel (2017) attempted to incorporate certain interdependencies within an entrepreneurial ecosystem into his framework instead of merely describing and distinguishing attributes. The configuration of inter-dependent attributes and their relations is different for every entrepreneurial ecosystem, which suggests that entrepreneurial ecosystems are highly heterogeneous in their configuration and that their differences in development are propelled in multiple ways (Spigel, 2017). The three interconnected categories of ecosystem components contain the complexity of this phenomenon while at the same time offering a modular framework that can be applied to different scenarios. Other researchers derived categorizations of ecosystem components similar to Spigel’s (2017). For instance, Nicotra, Romano, Del Giudice, and Schillaci (2017)

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suggested a distinction between financial capital, institutional capital, knowledge capital, and social capital. While their first three capitals fall under Spigel’s (2017) material attributes, their social capital encompasses both the social and the cultural layers of the entrepreneurial ecosystem. Brown and Mason (2017) developed a framework based their suggestions in Mason and Brown (2014) similar to that developed by Spigel (2017). They divided the key actors of entrepreneurial ecosystems into entrepreneurial actors, entrepreneurial resource providers, entrepreneurial connectors, and entrepreneurial orientation/culture, with the latter three being almost identical to Spigel’s (2017) ecosystem attributes. Spigel’s (2017) framework of the relational organization of entrepreneurial ecosystems was an essential contribution towards a better understanding of entrepreneurial ecosystem components and their configuration. The introduction of three interconnected layers for attributes that are located on different logical levels successfully introduces the notion that entrepreneurial ecosystems are complex heterogeneous constructs. Furthermore, it opened the door to analyze differences in the evolutionary paths of entrepreneurial ecosystems as the relationships among attributes develops the entrepreneurial ecosystem over time. 2.1.4.2 The Evolutionary Nature of Entrepreneurial Ecosystems There is a consensus in research that entrepreneurial ecosystems are not static, but complex idiosyncratic systems that continuously evolve (e.g., Roundy et al., 2018; Spigel, 2017). This continuous evolution has been highlighted by several researchers (Bala Subrahmanya, 2017; Colombelli et al., 2017; Spigel & Harrison, 2018; Brown & Mason, 2017; Mack & Mayer, 2016; Auerswald & Dani, 2017). Literature suggests that ecosystem evolution consists of different stages of development that lead, in the best-case scenario, to self-sustainability, in which condition entrepreneurial ecosystems are resilient to external influences and are able to continuously reproduce over time (Brown & Mason, 2017; Colombelli et al., 2019; Roundy, Brockman, & Bradshaw, 2017; Spigel & Harrison, 2018). This chapter explores the evolutionary perspective of entrepreneurial ecosystems in order to understand the non-linear and dynamic nature that drives the formation, growth, and sustainment of ecosystems. Mack and Mayer (2016) made the first attempt to develop an evolutionary model of entrepreneurial ecosystems that spans several stages. They presented a life-cycle model that rather closely resembles the product lifecycle concept (e.g., Polli & Cook, 1969) with its four phases, introduction, growth, maturity, and decline, without referencing it. Mack and Mayer (2016) named their four lifecycle phases of ecosystem evolution (Figure 5):

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i) Birth phase: The number of startups increases at a low level, with more firm births than deaths. ii) Growth phase: The growth rate of firm births exceeds the growth rate of firm deaths. iii) Sustainment phase: A smaller rate of firm births is met with a more significant rate of firm deaths. iv) Decline phase: The number of firm deaths is significantly larger than the number of firm births.

Figure 5: Evolution of an Entrepreneurial Ecosystem Adapted from Mack and Mayer (2016)

To examine the characteristics of these four phases, Mack and Mayer (2016) applied Isenberg’s (2011) six domains of entrepreneurial: policy, finance, culture, support, human capital, and markets. They proposed differences in the relative importance of each domain depending on the evolutionary phase of the entrepreneurial ecosystems. While this model made the first step in contributing to the development of understanding the non-linear nature of entrepreneurial ecosystems, the life-cycle stages from Mack and Mayer (2016) and their impact on ecosystem dimensions are based neither on literature nor on sufficient empirical data. They selected Phoenix, US, as their empirical location, but their analysis demonstrated that this entrepreneurial ecosystem was still in the birth phase. That means that the other three phases were developed based on their predictions and were not fully substantiated, and their arguments supporting their assumptions regarding the sustainment and decline phases were partly insufficient. It is also worth mentioning that the entire evolutionary perspective was developed without sufficient empirical data or theoretical foundation. Therefore, it is no surprise that there are neither scientific nor

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practitioner publications that support their argumentation on the sustainment and decline of mature entrepreneurial ecosystems. Brown and Mason (2017) considered more diverse aspects of the evolutionary nature of entrepreneurial ecosystems than Mack and Mayer (2016). Instead of delineating different phases of ecosystem evolution, they examined existing literature to understand the dynamics and processes that drive ecosystem development. Based on the analysis, they proposed a binary classification system with two opposed archetypical examples, an embryonic entrepreneurial ecosystem that just emerged and a scale-up ecosystem that is well-functioning and self-sustainable. By analyzing the state of the ecosystem dynamics which they derived from literature, Brown and Mason (2017) developed several criteria with which one can see how far the ecosystem approached the idealized final stage of a thriving scale-up ecosystem. Brown and Mason (2017) based their literature analysis on four important groups of ecosystem components (Figure 6): (i) entrepreneurial actors, (ii) entrepreneurial resource providers, (iii) entrepreneurial connectors, and (iv) entrepreneurial culture. Entrepreneurial Actors - Support & mentoring services - Business incubators & co- working - Networking & accelerator programs

Entrepreneurial Resource Providers - Financial capital providers - Business angels - Large firms - Universities and R&D centres

Startup Ecosystem Entrepreneurial Connectors - Professional associations - Entrepreneurship clubs & communities - Business enterprise centres - Investor-investee matching services

Entrepreneurial Culture - Social status of entrepreneurship - Role models - Entrepreneurship education - Failure tolerance & innovation embracing

Figure 6: Key Actors Within Entrepreneurial Ecosystems Source: Adapted from Brown and Mason (2017)

These locally bound key actors, interrelationships, and cultural peculiarities have striking similarities to the conceptual model of entrepreneurial ecosystems proposed by Spigel (2017), with its material, social, and cultural attributes.

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Entrepreneurial actors denote all entrepreneurs and organizations that offer support to entrepreneurial activities. Entrepreneurial resource providers list every ecosystem actor that provides knowledge or human and financial resources. Entrepreneurial connectors encompass all individuals, organizations, and events that connect other ecosystem stakeholders. Finally, entrepreneurial culture describes the social status of entrepreneurs, their education, and the influence of role models. Apart from these four groups of ecosystem components, Brown and Mason (2017) emphasized three crucial drivers of entrepreneurial ecosystems: blockbuster entrepreneurship, entrepreneurial recycling, and dealmakers. Blockbuster entrepreneurship refers to extraordinarily successful high-growth startups that produce wealthy, experienced, and well-connected entrepreneurs as well as employees. They are part of the entrepreneurial actors and attract human and financial capital, generate knowledge spillovers and subsequently positively influence further new venture creation (Buenstorf & Fornahl, 2009). The second ecosystem driver that Brown and Mason (2017) highlighted is entrepreneurial recycling, which is particularly important to the sustainable development of the entrepreneurial ecosystem. This metaphorical term explains the phenomenon in which experienced entrepreneurs remain active in the entrepreneurial ecosystem as mentors or investors, especially after they sold their business. By being involved in the entrepreneurial ecosystem as mentors or investors, they reinvest the profit from their previous or current business in next-generation startups and help them with their rich entrepreneurial experience and knowledge. This phenomenon, in which successful entrepreneurs provide future entrepreneurs with their financial, social, and human capital to help them grow their startups, is referred to as entrepreneurial recycling in other publications as well (Bahrami & Evans, 1995; Brown & Mason, 2017; Ensign & Farlow, 2016; Mason & Harrison, 2006; Napier & Hansen, 2011). The third type of ecosystem dynamic identified by Brown and Mason (2016) involves dealmakers, which refer to individuals with valuable social capital. These individuals “have deep fiduciary ties within regional economies and act in the role of mediating relationships, making connections, and facilitating new firm formation” (Feldman & Zoller, 2012, p. 24). Dealmakers are important for entrepreneurial ecosystems, as they orchestrate connections directed to entrepreneurial processes. Often, early-stage entrepreneurs lack substantial social capital, and dealmakers can help them extend their social capital by introducing different types of networks within an ecosystem. As a central node within the overall ecosystem network, their connections provide new entrepreneurs with the legitimacy they need to deal with established resource providers. Napier and Hansen (2011) described them as the glue of the entrepreneurial ecosystem. These dealmakers often have different backgrounds, for example, as VCs, business angels, or accelerator

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managers. As successful entrepreneurs are usually well-connected within broad and diverse types of networks, they are also potential dealmakers. These three mechanisms – blockbuster entrepreneurship, entrepreneurial recycling, and dealmakers – that drive the evolutionary processes of entrepreneurial ecosystems are closely related to each other and have certain causal relations. The most important driver here is blockbuster entrepreneurship, without which there would be no entrepreneurial recycling and few dealmakers, and networks around the entrepreneurial process would be less dense. In other words, the existence of blockbuster entrepreneurship is a prerequisite for the activation of the further two drivers. Entrepreneurial recycling drives the circulation of financial resources and entrepreneurial knowledge within entrepreneurial ecosystems. Dealmakers help startups scale their business as they leverage the startups’ social capital with their own strong and widespread networks. Entrepreneurial recycling and dealmakers, therefore, help sustain the production of blockbusters, which in turn reinforces entrepreneurial recycling and dealmakers (Brown & Mason, 2017). This process therefore creates a virtuous cycle that strengthens ecosystem growth over time. This implies an evolutionary path of ecosystem development that can be described by the peculiarities of certain ecosystem dynamics. Taking these three drivers as core dimensions, Brown and Mason (2017) propose a preliminary typology of entrepreneurial ecosystems (Table 7). This typology contains a variety of dimensions with regards to ecosystem dynamics and classifies them according to two diametrically opposed idealized entrepreneurial ecosystems, an underdeveloped “embryonic ecosystem” and a well-developed “scale-up ecosystem.” Table 7: Basic Typology of Entrepreneurial Ecosystem Evolution

A basic typology of entrepreneurial ecosystem evolution Ecosystem dynamics Dominant actors

Nature of ecosystem interactions Levels of entrepreneurial orientation

Embryonic ecosystem

Scale-up ecosystem

A limited number of startups. Established incumbent firms are the bedrock of the local economy and often drive the startup process

High numbers of growth-oriented startups. Large numbers of rapidly growing ambitious companies (e.g., high growth firms). Unicorns dominate the landscape spawning more startups. Strong levels of interactions within startups. Large rapidly growing firms heavily configure the ecosystem architecture. Strong vertical inter-actor networks. High. Strong growth-focus on generating new ‘blockbuster’ firms (e.g., initial public offerings)

Limited interactions within the startup ecosystem. Weak vertical interactions between startups, larger firms and sources of growth capital Low. Startups focus on early and/or premature exits. High growth firms frequently acquired by foreign multinationals.

2.1 Entrepreneurial Ecosystems Nature of funding escalator and availability of funding Importance and role of dealmakers Fluidity and diversity of ecosystem actors Level of “Blockbuster entrepreneurship Nature of entrepreneurial recycling

Spatial dynamics Importance and focus of public policy Archetypal empirical example

43

Funding driven by the needs of startups, good sources of seed and early-stage funding, often publicly funded through co-investment schemes. Limited numbers of dealmakers, tend to dominate most key deals focused on single sectors. Predominantly locally domiciled entrepreneurs, low levels of ‘transnational entrepreneurs’.

Full range of funding sources across the entire funding escalator. Nearly all privately funded.

Limited, but sometimes occasional ‘blockbusters’ entrepreneurial ‘events’

Frequent blockbusters lead to a cumulative process which generates a virtuous cycle of blockbuster ‘events’ A large number of blockbusters ‘exits’. Substantial levels of re-cycling and experiential learning for serial entrepreneurs. A large number of high net worth individuals who become angels.

A small number of major exits. Low levels of entrepreneurial recycling but limited to small projects. Limited number of angels, mostly syndicated and co-investment with government sources of venture capital. Mostly nationally focused with growing connections to international interactions for funding, human capital, and innovation Strong role for policy, typically focuses on increasing resources (especially funding) to new technology-based firms Scotland, Ireland, Milwaukee, Finland, Portugal

Large numbers of dealmakers with strong inter-regional and cross-sectoral connectivity Large numbers of entrepreneurs are non-native, immigration of ‘transnational entrepreneurs’ is high

Strong local, national and global interactions. Resources are drawn from a myriad of different sources and actors Limited role for policy, many initiatives are industry-led and focus on building vertical network connectivity across the ecosystem Silicon Valley, Cambridge (UK), Cambridge (US), Waterloo, London and Berlin

Source: Brown and Mason (2017)

In addition to blockbuster entrepreneurship, entrepreneurial recycling, and dealmakers, this typology considers the following determinants for the evolution of the entrepreneurial ecosystem: i) Dominant actors refer to business actors within the entrepreneurial ecosystem that are most visible and are focal firms of the regional economy. ii) The nature of ecosystem interactions is related to how involved other ecosystem participants are with startup activities.

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iii) The level of entrepreneurial orientation refers to the focus of entrepreneurs on whether to sell their startup early or to focus on prolonged exponential growth. iv) The nature of funding escalator and availability of funding looks at funding opportunities of startups across the entire growth process, from seed rounds to venture capital. v) The fluidity and diversity of ecosystem actors refer to numbers of transnational entrepreneurs and ecosystem actors that are not native to the region. vi) Spatial dynamics looks at the extent to which resources are acquired outside of ecosystem boundaries and how many sources are available. vii) The importance and focus of public policy refer to a strong role of policy in embryonic ecosystems and a weak role in scale-up ecosystems, where it is usually limited to favorable legal frameworks and network facilitation. Brown and Mason (2017) focused on determinants that drive ecosystem growth and implied that the configuration of the ecosystem dynamics differs depending on the development status of the entrepreneurial ecosystem. This aspect differentiates their model from other conceptualizations that merely describe certain components of entrepreneurial ecosystems (e.g., Cohen, 2005; Drexler et al., 2014; Isenberg, 2011; Mason & Brown, 2014). Brown and Mason (2017) contributed to the academic discussions on entrepreneurial ecosystems by moving the research focus from merely describing actors to bridging the different types of dynamics among actors and within ecosystem development. While the model of Brown and Mason (2017) is undoubtedly helpful to better understand entrepreneurial ecosystems, the conceptualization has several weaknesses. First of all, they relied on a literature review to identify several actors, such as universities or support organizations, as important ecosystem players (Mason & Brown, 2014; Spigel, 2017). Although it is helpful for scholars to understand ecosystem actors according to four categories (entrepreneurial actors, entrepreneurial resource providers, entrepreneurial connectors, and entrepreneurial orientation), Brown and Mason do not offer clear explanations how these actors are interrelated and how their interrelationship influences the determinants of ecosystem evolution, such as entrepreneurial recycling process. Additionally, the interplay of ecosystem dynamics and their peculiarities which shape entrepreneurial ecosystems in different ways are not part of their conceptualization; they simply developed two extreme types of entrepreneurial ecosystems and the explained characteristics of each (Table 7). While this typology describes a stark contrast between entrepreneurial ecosystems in different evolutionary stages, its binary nature makes it unavoidably static, meaning that it offers limited explanation for the dynamic process of the phenomenon. Another notable point

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that is also related to the binary nature is that the typology of Brown and Mason (2017) does not allow scholars to fully consider entrepreneurial ecosystems in different evolutionary stages. Furthermore, most of the entrepreneurial ecosystems in the world fall under the embryonic ecosystem category, while only a few extraordinarily successful ones can be classified as scale-up ecosystems. In other words, many entrepreneurial ecosystems an evolutionary degree that lies between embryonic and scale-up ecosystems. Brown and Mason’s (2017) extreme contrast in this typology offers limited explanatory power about how such ecosystems can move forward to become scale-up ones. To sum up, Brown and Mason’s (2017) conceptualization reduced the complexity of ecosystem evolution and presented the evolutionary process of entrepreneurial ecosystems in a simplistic manner, leaving different evolutionary stages between early-emergence and mature sustainable ecosystems in a “black-box.” Another important contribution toward a better understanding of the evolutionary processes of entrepreneurial ecosystems was introduced by Colombelli et al. (2019). Their distinctive approach sheds light on the self-reinforcing interactions among actors in well-developed entrepreneurial ecosystems that drive a virtuous cycle of startup formation and resource creation. Colombelli et al. (2017) developed a conceptual model (Figure 7) that specifically looks at the change in governance design during the evolution of entrepreneurial ecosystems, emphasizing the role of anchor tenants as central players that strongly influence the evolutionary path of the entrepreneurial ecosystems. These anchor tenants can be different types of organizational entities such as a dominant and successful startup, an economic development agency, or a university. The role of the anchor tenant and thus the governance design changes over time from a more hierarchical dominant position with substantial impact on the overall trajectory of entrepreneurial ecosystems to a less pervasive and more relational function in more developed ecosystems (Colombelli et al., 2019). In their conceptual model (Figure 7), Colombelli et al. (2019) visualized three phases of entrepreneurial ecosystem evolution: birth, transition, and consolidation. The birth phase is initiated when different actors begin to form communities in a close geographical, institutional, and relational context directed towards facilitating entrepreneurial processes (Colombelli et al., 2019). These early-stage communities and their growth are often facilitated and dominated by one or very few catalyst organizations, which they referred to as anchor tenants. The transition phase refers to the moment when the first successful cases initiate a cascade of social, cultural, political, and economic feedback mechanisms that strengthen the growth of entrepreneurial ecosystems. The last, consolidation phase describes an entrepreneurial ecosystem with a highly relational design wherein actors are well embedded within dense networks that reinforce interactions among ecosystem

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players and the overall regeneration and growth of entrepreneurial ecosystems (Colombelli et al., 2019). HIERARCHICAL DESIGN

ACTOR

ACTOR

ANCHOR TENANT ACTOR ACTOR ANCHOR TENANT

ACTOR

ACTOR

ACTOR

TRANSITION

RELATIONAL DESIGN

BIRTH

ACTOR

T1

T2

TIME

CONSOLIDATION

GOVERNANCE

ACTOR

T3

Figure 7: Changes in Governance Structures During Ecosystem Evolution Source: Colombelli et al. (2017)

To enter the consolidation phase and become self-sustainable, an entrepreneurial ecosystem must liberate itself from the dominant anchor tenant that fueled ecosystem dynamics during the birth phase. This critical progression takes place in the transition phase, in which the ecosystem governance design evolves from less to more heterarchical. In this phase, the relational design of entrepreneurial ecosystems also changes through a rising number of influential actors. These transitions enable resource recycling processes that build and strengthen networks outside of the previously dominant anchor tenant, which ensures that resources flow unimpeded through the entire entrepreneurial ecosystem (Colombelli et al., 2019). The transition phase is initiated by the increasing connectivity of actors, independent of dominant ecosystem stakeholders. The network density and complexity increase, and interactions among actors create feedback effects that start to mediate the entire ecosystem development. As the significance of anchor tenants’ role within the ecosystem gradually decreases, the governance design of the entrepreneurial ecosystem evolves towards a purely relational one, marking the start of the consolidation phase (Colombelli et al., 2019). Similar to Colombelli et al. (2019),

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Spigel and Harrison (2018) proposed three distinct phases of ecosystem evolution. Instead of focusing on the governance of ecosystems, however, they focused on understanding entrepreneurial ecosystems as processes that foster entrepreneurial activities and drive evolutionary progression. They argue that “In this sense, we can talk about ecosystem processes—the mechanisms through which startups and scale-ups gain a competitive edge from their regional environments—as well as ecosystems as processes: the ways in which ecosystems are reproduced and transformed over time” (Spigel & Harrison, 2018, p. 158). Rather than viewing entrepreneurial ecosystems as tangible constructs with different stakeholders, they claim that it is essential to examine the process through which entrepreneurial actors create and acquire resources, such as capital and knowledge. Notably, Spigel and Harrison (2018) explicitly stated that many features that constitute successful entrepreneurial ecosystems emerge from entrepreneurs themselves. Entrepreneurial ecosystem processes emerge in the mutual relationship between startups and entrepreneurial ecosystems: Startups not only profit from entrepreneurial ecosystems as passive support recipients but also strengthen and expand entrepreneurial ecosystems over time as active contributors to the reproduction and development of entrepreneurial ecosystems. Similar to Brown and Mason (2017), Spigel and Harrison (2018) distill differences of the evolutionary progression of ecosystems down to the comparison of nascent ecosystems with well-functioning ecosystems. They developed three sets of research propositions regarding influencing factors of ecosystem advancement by targeting three aspects: (i) the engagement of entrepreneurs with their entrepreneurial ecosystems, (ii) the creation and recycling of entrepreneurial resources, and (iii) the differences between well- and less-developed entrepreneurial ecosystems. i) The first set of propositions deals with the process of building a network and gaining legitimacy within the community, which entrepreneurs derive from their engagement with the ecosystem. The entrepreneurs’ ability to acquire resources depends on the strength of their network and the perceived legitimacy within the community. Other actors can support entrepreneurs by creating opportunities in which they can build and extend their networks, for instance, through organizing meetups or events. In nascent entrepreneurial ecosystems, low levels of connectivity impair the ability of entrepreneurs to acquire resources. ii) The second proposition argues that successful entrepreneurial ecosystems are characterized by high levels of resource recycling. In this process, resources such as capital, knowledge, and talent from previous startups are re-introduced into the entrepreneurial ecosystem, thereby making the resources generated through the entrepreneurial activities of previous startups

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available for current and future startups in the ecosystem. This leads, in turn, to future recycling processes. This re-integration of resources from successful entrepreneurs creates a sustainable virtuous cycle of resource creation and recycling within the ecosystem. iii) The third set of propositions deals with differences between poorly and well-functioning entrepreneurial ecosystems. Successful entrepreneurial ecosystems can retain resources that a number of successful and influential entrepreneurs have attracted and created over time and exert strong positive imprinting effects on future entrepreneurs. By contrast, the recycling process within less developed entrepreneurial ecosystems may struggle from the out-ward flow of entrepreneurs and resources which move out of the entrepreneurial ecosystem towards more established and attractive ecosystems (Spigel & Harrison, 2018). Such flows of entrepreneurs and resources between ecosystems indicate that ecosystems worldwide compete for talent and resources, and an entrepreneurial ecosystem can achieve competitive advantages by configuring the idiosyncratic resource structure. Based on these propositions, Spigel and Harrison (2018) visualized the transformation of entrepreneurial ecosystems and the process of resource creation and flow over time whereby a nascent entrepreneurial ecosystem develops into a resilient, self-sustained, vibrant one (Figure 8 in combination with Table 8). They included different actors, such as anchor organizations, and visualized resource creation, flow, and recycling. One meaningful contribution is the inclusion of other ecosystems and their exchange of resources, while other models generally assume a single ecosystem setting. The three stages demonstrate differences in the number of ecosystem actors, the intensity of interactions among actors, and their overall interconnectedness.

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Figure 8: Transformation of Entrepreneurial Ecosystems Adapted from Spigel and Harrison (2018) Table 8: Characteristics of Transformation of Entrepreneurial Ecosystems

Evolutionary Stage

Characteristics

Nascent ecosystem

  

Strengthen-  ing ecosystem

Low levels of connectivity between new ventures and other ecosystem actors Little recycling of resources such as workers and few new resources created internally Leakage of existing resources to other regions Higher levels of connectivity between new ventures and other ecosystem actors, the emergence of dealmakers to facilitate connections

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  Resilient ecosystem

 

Weakened ecosystem

   

Significant recycling of resources such as workers and the creation of new resources and cultural support The attraction of new resources from outside the ecosystem Very high levels of connectivity between ecosystem actors New entrepreneurial resources are created and flow through interfirm and personal networks Significant new resources attracted to ecosystem The internal or external shock has weakened interfirm connection and personal networks Loss of firms and other resources through outmigration or failure Resources no longer recycle within the ecosystem

Adapted from Spigel and Harrison (2018)

Spigel and Harrison (2018) also considered a possible downturn before the entrepreneurial ecosystem reaches resilience. This downturn can be caused by the internal or external disturbance of resource flow, such as an economic crisis, which weakens the overall ecosystem processes. This leads to the loss of firms, resources, and inter-firm connections. The third stage is therefore split into two possible outcomes, either successful or failed ecosystem development. The nascent ecosystem describes the default case of most regions with a limited amount of entrepreneurial activity and no considerable success stories. There are only low levels of connectivity between the few dispersed ecosystem actors and new ventures. This type of ecosystem is characterized by few internally created resources and the absence of effective resource recycling processes (Brown & Mason, 2017; Mason & Harrison, 2006; Napier & Hansen, 2011). Existing resources are pulled out of the entrepreneurial ecosystem towards other regions; for instance, talented entrepreneurial human capital moves to the attractive entrepreneurial ecosystem, as their current location does not offer any advantages for their entrepreneurial activities. In a nascent ecosystem, an entrepreneurial culture that could encourage regional entrepreneurial activities and foster the interaction of ecosystem participants is weak or non-existent. According to Spigel and Harrison (2018), nascent ecosystems must transform into strengthening ecosystems by increasing the number of new ventures and strengthening inter-stakeholder connectivity before they can achieve self-sustainability. Both a large number of startups and significant interconnectivity among actors leads to the emergence of dealmakers (Feldman & Zoller, 2012), who further

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reinforce social networks and facilitate resource flows. When some startups become successful, their success cases can help diffuse entrepreneurial culture throughout the entrepreneurial ecosystem. Instead of resource leakage into other ecosystems, the ecosystem with an attractive entrepreneurial culture becomes interesting for actors located outside the region. This results in the attraction of new resources and talents from other less developed regions. The strengthening ecosystem can either grow into a resilient ecosystem or decline into a vulnerable one. When no internal or external “shocks” deteriorate the ecosystem processes, the strengthening ecosystem may become resilient. This ideal form of entrepreneurial ecosystem, with robust recycling mechanisms and the constant creation of new entrepreneurial resources, is characterized by high levels of connectivity between ecosystem actors and dense social networks that facilitate resource flows. In addition to their own resource creation and recycling processes, resilient ecosystems naturally attract significant amounts of new resources from other ecosystems, which helps to continually rejuvenate their resource pool (Spigel & Harrison, 2018). Although resources and their accessibility or flow through dense networks of ecosystem actors remain central to their arguments, Spigel and Harrison (2018) also highlighted localized entrepreneurial culture as an important underlying driver of ecosystem processes. Their triad of resources, networks, and culture as the central pillars of entrepreneurial ecosystems resembles conceptual arguments of Spigel (2017) and Brown and Mason (2017). In their article, Spigel and Harrison (2018) concluded by discussing the policy challenges of entrepreneurial ecosystems based on their process view of ecosystems. They explained that an important initial foundation for creating and growing nascent ecosystems is the development of a supportive entrepreneurial culture of networking, trust, mutual learning, innovation, and risk-taking. However, they also argued that this cultural change cannot be realized by a top-down approach from the government, but instead must be created through entrepreneurial activities. Policy interventions directed towards cultivating networks and strengthening the resource base are more likely to have a positive impact on the development of entrepreneurial ecosystems (Spigel & Harrison, 2018). Using support organizations to add resources to the ecosystem must always be accompanied by efforts to strengthen local networks that foster and regulate the flow of resources throughout the entrepreneurial ecosystems. The literature on the evolutionary nature of entrepreneurial ecosystems tends to describe few or even the minimum of two evolutionary stages of entrepreneurial ecosystems, namely, the very early stage with limited resources and dynamics and the late stage that shows a high degree of self-sustainability. However, entrepreneurial ecosystems, in reality, do not exist in these extremes but lie somewhere in

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between, and the question of how such ecosystems in the middle evolutionary stages can successfully develop over time is not fully elaborated. One possible explanation of the lack of this perspective is the complexity of the ecosystem’s evolution. Due to the unlimited number of influencing factors, there are numerous ways in which entrepreneurial ecosystems evolve. To sum up, a few studies made the first step to explore the evolutionary nature of entrepreneurial ecosystems, but the current research status calls for further investigation on the heterogeneous configuration of ecosystem evolution. 2.1.4.3 Entrepreneurial Ecosystems as Complex Adaptive Systems As discussed in the previous sections, research on entrepreneurial ecosystems agrees that the latter are complex and have idiosyncratic structures that continually evolve (Bhawe & Zahra, 2019; Brown & Mason, 2017; Carayannis, Provance, & Grigoroudis, 2016; Jacobides et al., 2018; Mack & Mayer, 2016; Spigel, 2017; Thompson, Purdy, & Ventresca, 2018). Nevertheless, most articles on entrepreneurial ecosystems avoid explaining their understanding of the complexity and adaptivity of entrepreneurial ecosystems on the theoretical level. Roundy et al. (2018) were the first researchers to connect their understanding of entrepreneurial ecosystems with complexity science in order to conceptualize the phenomenon. Complexity science seeks to analyze systems of multi-faceted interactions among different actors and factors that eventuate in the development of novel and unpredictable patterns, structures, and behaviors (Freiling & Reckenfelderbäumer, 2010; Fuller & Moran, 2001; Levin, 1998; Lissack, 1999). Patterns that are created at one level are influenced by the overall system and internal processes that operate at multiple levels (Lissack & Letiche, 2002), and these interrelated processes on several levels of the system create complexity (Arthur, 1999; Innes & Booher, 1999). Complex systems are adaptive, as the different features continuously react to and interact with each other and their overall environment, which leads to modifications of the system (Schindehutte & Morris, 2009). These autopoietic systems are capable of reproducing and sustaining themselves. Applying the theoretical lens of complex adaptive systems, Roundy et al. (2018) linked entrepreneurship research on venture emergence to the complexity of entrepreneurial ecosystems. Consistent with the theory of complex adaptive systems, they argued that the entrepreneurial ecosystem can be understood as a construct because it shares six distinctive characteristics (Figure 9): (i) emergence through self-organization, (ii) open but distinct boundaries, (iii) complex components, (iv) non-linear dynamics, (v) adaptability through dynamic interactions, and (vi) sensitivity to initial conditions. Each characteristic is explained below: i) Self-organization refers to the non-hierarchical heterogeneous nature of entrepreneurial ecosystems (Spigel, 2017; Stam, 2015). This relational

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organization of entrepreneurial ecosystems implies that no single agent is in control of the entire system. Instead, diverse and interdependent actors are involved in organizing processes within the system. This self-organization through complex interdependencies facilitates the emergence of properties and behaviors, which can only be created through interactions and are not able to exist in isolation. An example of this context is the exchange of knowledge on a specific topic between two entrepreneurs. Without their interaction, that is, in isolation, their knowledge would be limited to its current scope. By exchanging knowledge, however, both entrepreneurs expand the scope of their knowledge. This new property can only emerge through interaction and not in isolation. ii) Open but distinct boundaries refer to the notion, common in research on the topic, to understand entrepreneurial ecosystems as open systems (Brown & Mason, 2017; Carayannis et al. 2018; Spigel & Harrison, 2018). While the entrepreneurial ecosystems themselves are commonly viewed as regional phenomena (Malecki, 2018; Mason & Brown, 2014), literature suggests that entrepreneurial ecosystems are influenced by outward- and inward-directed resource flows crossing regional boundaries (Spigel & Harrison, 2018). iii) Complex components refer to the composition of components and their integration into the multilevel architecture of entrepreneurial ecosystems (e.g., Spigel, 2017). Each component comprises multiple agents who are idiosyncratic in their attributes, and the literature on entrepreneurial ecosystems highlights the fact that ecosystems consist of complex components such as entrepreneurs, mentors, investors, and other agents who provide resources (e.g., Audretsch & Belitski, 2017; Isenberg, 2010; Sussan & Acs, 2017). These resource providers are heterogeneous in terms of their roles and their interactions with other agents inside and outside the ecosystem but homogenous enough to be grouped under certain umbrellas, such as investors who have similar intentions and behaviors (Baron & Freiling, 2019; Stam, 2015). Consistent with the complex adaptive systems theory, Roundy et al. (2018) argue that these ecosystem components can fulfill several roles at once, for instance, as a mentor and entrepreneur, and that the features of ecosystems can create feedback loops, which transforms their nature over time. For instance, business angels act as the simultaneous providers of advice and financial capital, which requires them to have different backgrounds for both roles. This example shows that components are complex because they are comprised of these heterogeneous agents that each have multiple interactions with other agents (Roundy et al., 2018).

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iv) Non-linear dynamics explains that the growth of entrepreneurial ecosystems can be stimulated and fostered through virtuous feedback cycles, such as resource recycling, that are created within the ecosystem (Brown & Mason, 2017; Spigel & Harrison, 2018). These non-linear dynamics impose a continuous change to the entrepreneurial ecosystems, which accords with the nature of adaptable complex systems and leads to autopoiesis (Luhmann, 1986; McKelvey, 2004). v) The adaptability through dynamic interactions refers to the abovementioned autopoiesis through which entrepreneurial ecosystems can adapt to new circumstances. The interactions of agents within the entrepreneurial ecosystem continuously create modifications of the overall system. This helps the system respond to endogenous or exogenous shocks that can negatively affect the overall conditions. The reaction of agents to the creation of resources, or to disturbances such as startup failure, leads to modifications of agent relations and of the overall structure of the entrepreneurial ecosystem. Roundy et al. (2018) named mentors as an example in this context, as they strengthen the density of networks within ecosystems by linking entrepreneurs to resources providers. They argued that the existence of connections to more resource providers increases the flexibility of entrepreneurs, which positively influences the overall adaptability of the entrepreneurial ecosystem. vi) The sensitivity to initial conditions refers to the property of entrepreneurial ecosystems in which certain events may impact the initial conditions, which affects the development of the entrepreneurial ecosystems over time (Gray, Golob, & Markusen, 1996; McKelvey, 2004). Variations that constantly occur and change the initial idiosyncratic configuration of entrepreneurial ecosystems can produce unexpected outcomes in later development stages of ecosystems (Gray et al., 1996). The sensitivity to initial conditions may thus result in path dependency (Coombs & Hull, 1998; Hassink, 2006) when events and their effects become embedded in the entrepreneurial ecosystems (Roundy et al., 2018). This path dependency is especially strong with regard to behaviors that are ingrained into cultural values and beliefs (Inglehart & Baker, 2000). Following the complex adaptive systems approach and utilizing the six distinctive characteristics described above, Roundy et al. (2018) defined an entrepreneurial ecosystem as “a self-organized, adaptive, and geographically bounded community of complex agents operating at multiple, aggregated levels, whose non-linear interactions result in the patterns of activities through which new ventures form and dissolve over time” (p. 6). This definition is in line with other conceptual work on entrepreneurial ecosystems, which argues that complex interactions of multiple actors within a certain region develop and form the entrepreneurial ecosystems

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and drive its constant evolvement (Brown & Mason, 2017; Spigel, 2017), but the definition of Roundy et al. takes a further step than other conceptual work by adapting the theory of complex adaptive systems and integrating it into the context of entrepreneurial ecosystems.

Emergence Through SelfOrganization

Sensitivity to Initial Conditions

Open but Distinct Boundaries

Complexity of Entrepreneurial Ecosystems

Adaptability Through Dynamic Inter-actions

Complex Components

Non-Linear Dynamics

Figure 9: Complexity of Entrepreneurial Ecosystems

Based on Roundy et al. (2018) Similar to Spigel and Harrison (2018), Roundy et al. (2018) see entrepreneurs as central actors in entrepreneurial ecosystems, while the community and network function as facilitators of resource flow and the injection of resources as the fuel for ecosystem growth. Roundy et al. (2018) integrated these multi-level interdependencies into their reasoning by linking them to the emergence of an

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entrepreneurial ecosystem. They explained the emergence of entrepreneurial ecosystems by proposing three interrelated agent- and system-level forces that interplay to develop ecosystems (Figure 10): (i) intentionality and adaptive tensions of entrepreneurs, (ii) coherence of entrepreneurial activities, and (iii) injections of resources into the entrepreneurial ecosystem. Roundy et al. (2018) explained each force as follows: i) The adaptive tensions of entrepreneurs essentially drive the emergence of entrepreneurial processes. Adaptive tensions, such as perceived opportunities, are the factors that pull entrepreneurs towards starting a venture (Lichtenstein, Carter, Dooley, & Gartner, 2007; McKelvey, 2004). These external triggers of entrepreneurial action can enhance the entrepreneurial intention of entrepreneurs within entrepreneurial ecosystems, resulting in an increase in the number of startups in the region (Roundy et al., 2018). ii) The coherence of entrepreneurial activity refers to the interconnectedness and resource flows among the entrepreneurial ecosystem and communities or networks (Lichtenstein et al., 2007). These interrelationships are fueled by coherent intentions and goals of the different ecosystem actors (Roundy et al., 2018). The denser and more intensive the connections among different ecosystem components are, the more coherent the entrepreneurial activities of the entire entrepreneurial ecosystem. iii) The third force driving the emergence of entrepreneurial ecosystems is the injection of resources. According to Roundy et al. (2018), the availability of resources within an entrepreneurial ecosystem positively influences entrepreneur’s intention, since nascent and would-be entrepreneurs in the region can access the resources, which are necessary to found and scale their business. Furthermore, resource availability strengthens the coherence of ecosystem actors, because accessing resources is the main reason for interactions among actors within entrepreneurial ecosystems (Spigel & Harrison, 2018). When the region does not possess abundant entrepreneurial resources from the beginning, more resources must be acquired from outside. This injection of resources into the entrepreneurial ecosystem fuels entrepreneurial processes that drive and reinforce the development of entrepreneurial ecosystems (Spigel & Harrison, 2018). As seen in this section, the literature on entrepreneurial ecosystems has addressed the complex, dynamic, evolutionary, and self-reproducing nature of entrepreneurial ecosystems, but without a theoretical foundation (Acs et al., 2017; Brown & Mason, 2017; Carayannis et al., 2016; Spigel, 2017; Spigel & Harrison, 2018). Roundy et al. (2018) contributed to the understanding of entrepreneurial ecosystems in this regard by linking entrepreneurial ecosystems to six distinctive characteristics of the complex adaptive systems approach: self-organization, open but

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distinct boundaries, complex components, non-linear dynamics, adaptability, and sensitivity to initial conditions.

Adaptive tensions pull talent towards founding a startup

Connections strengthen coherence of entrepreneurial activities

Ecosystem Development

Injections of resources helps startups to grow and creates new adaptive tensions

Figure 10: Three Interrelated Forces of Ecosystem Emergence

Building on these characteristics, they argued that the emergence of entrepreneurial ecosystems is driven by three interrelated dynamics. First, entrepreneurial intention is strengthened by opportunities and perceived viability to start a business. Second, entrepreneurial activities are supported through coherence among different ecosystem components. Third, entrepreneurial intention and coherence among components are strengthened by injections of resources that flow through the entrepreneurial ecosystem. Section 2.1 discussed the conceptual background of entrepreneurial ecosystems and illuminated the potential role of anchor tenants in the evolution of entrepreneurial ecosystems. As discussed in Chapter 1, the underlying assumption of this study is that public accelerators can stimulate ecosystem evolution as a particular type of anchor organizations. Therefore, the next section presents the conceptual background on accelerators.

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2.2 Accelerators Accelerators are a new type of startup support and investment organization that has recently begun to attract the attention of researchers and practitioners. Accelerators are organizations designed to speed up entrepreneurial processes in startups by purposefully providing resources such as financial capital, social capital, and knowledge (Hallen et al., 2017; Stayton & Mangematin, 2018). Their role as resource providers made them an important component of entrepreneurial ecosystems (Brown & Mason, 2017; Brown et al., 2019; Goswami, Mitchell, & Bhagavatula, 2018). The impact of accelerators on the global startup scene is incontrovertible. After the first accelerator was founded in 2005, the concept quickly spread around the world. For instance, Drori and Wright (2018) show in Figure 11 the rapid growth of accelerator numbers in the entrepreneurial ecosystem of Berlin, with the establishment of 20 accelerators in just four years. In the US, in 2015, almost one-third of all the startups that received the first venture capital investment participated in acceleration programs (“Pitchbook 2016,” 2016). These numbers clearly demonstrate the essential role of accelerators in startup support, especially considering that it was only in 2005 that the first accelerator was launched. However, surprisingly little academic research has studied accelerators.

Figure 11: Accelerators in Berlin Source: Drori and Wright (2018)

This section presents the literature on accelerators to provide a better understanding of their peculiarities. First, the recent emergence of accelerators is explained. Thereafter, the distinction between accelerators and their ancestors is shown to delineate the scope of the concept of accelerators. Third, a conceptual

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understanding of accelerators is developed by presenting their structural elements and typology and the unique characteristics of public accelerators. Finally, the literature on accelerators is presented, summarizing the important contributions of previous studies. 2.2.1 History of Accelerators 2.2.1.1 Emergence of Accelerators Accelerators support a significant number of startups compared to other ecosystem actors, leading Miller and Bound (2011) to refer to them “startup factories” that create a mass of entrepreneurs. This section explores the root of the concept of accelerators and presents the reasons for their rapid diffusion through ecosystems worldwide. 2005 was the birth year of accelerators – a new type of investment and support organization in startup scenes. This novel type of organization is characterized by its hybrid nature, combining and improving critical parts of traditional approaches to startup grooming to accelerate the underlying processes (Fehder & Hochberg, 2018; Miller & Bound, 2011). The first accelerator, “Y Combinator,” was established by accident following an experiment on angel investing. The former entrepreneurs, Paul Graham, Trevor Blackwell, Robert Tappan Morris partnered with Jessica Livingston, initiated the program, which was first called “Cambridge Seed,” to learn the mechanics of angel investing. Wanting to speed up the learning process, they decided to invest in several startups at once (Graham, 2012) and created a summer program of three months for up to ten startups with minimal seed financing and standardized terms. The program offered much advice and a final pitch day to attract potential investors for follow-up funding. Surprised by the unexpectedly massive success of the first summer program, they established Y Combinator as an organization to institutionalize this new form of synchronized startup funding and support. The Y Combinator founder, Paul Graham, reflected on the initial development, saying, “We got lucky in that the length and structure of a summer program turn out to be ideal for what we do. The structure of the Y Combinator cycle is still almost identical to what it was that first summer” (Graham, 2012). On their philosophy, Y Combinator says, “We think founders are most productive when they can spend most of their time hacking. Our goal is to create an environment where you can focus exclusively on building a product and talking to users” (“Y Combinator,” 2014). This is one reason why Y Combinator does not provide coworking space, to limit distraction. However, founders must move to the Bay Area for the duration of the program, as the key of Y Combinator is to individually

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work with the startups on their ideas. Every Tuesday, there is a collective dinner with an expert speaker on startups, and every two weeks, group office hours are held, wherein startups learn from each other. Apart from this and the final demo day, however, no structure is imposed on the participants, who can book individual office hours with Y Combinator’s partners whenever the participants need partners’ individual support (“Y Combinator,” 2014). In their first 13 years, Y Combinator funded over 1,900 startups, which, in 2018 reached the combined valuation of over 100 billion USD ("Y Combinator,” 2014). The early success of Y Combinator drew attention from other angel investors. In 2006, former entrepreneurs and investors Brad Feld, Jared Polis, David Cohen, and David Brown copied the approach of Y Combinator and began the accelerator TechStars to help their local entrepreneurial ecosystem in Boulder, Colorado, grow and attract new investment opportunities (Feld, 2012). TechStars’s approach was a little different from that of the pioneer. While Y Combinator was centered around its founders and their advice, TechStars attempted from the beginning to leverage its entrepreneurial ecosystem to bring in external mentors and experts. Other differences are the size of participants and the expansion strategy. While Y Combinator has continuously increased the number of participants per batch in one location, TechStars has kept batches small. To scale their successful program, they opened 45 additional programs around the globe attached to different entrepreneurial ecosystems. In addition to the geographical focus, some programs are established in cooperation with large corporations, such as the Barclays Accelerator or the Metro Accelerator, focusing on specific industries. As of 2018, TechStars accelerators have funded 1,599 companies, of which 87% are still active or have been successfully sold. The companies received almost 6.2 billion USD in total funding and have a collective market capitalization of 17.7 billion USD (“TechStars Accelerators,” n.d.). 2.2.1.2 Growing Impact of Accelerators The evident success of these accelerators in startup scenes began to attract scholarly attention. Fishback et al. (2007) conducted one of the first studies on accelerators, producing a short report for the Ewing Marion Kauffman Foundation. They identified accelerators as a new form of early-stage venture financing and argued that accelerators follow a similar contest-based method of startup selection and training. Observing this novel phenomenon, they noted that “This new approach to finding and nurturing high-tech entrepreneurial enterprises seems to be catching on like wildfire, not only in the US but in Europe and other parts of the world. We believe this is a highly significant development that has important implications for the way many other

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early-stage companies may be launched and financed in the future” (Fishback et al., 2007, p. 1). Their prediction was realized. Within the eight years since Y Combinator was founded, 170 accelerators were established in the US and invested in more than 5,000 participating startups, which eventually raised almost 20 billion USD in venture capital (Hathaway, 2016). According to the “Global Accelerator Report 2016” (2016), a total of 579 accelerators around the world invested more than 200 million USD into 11,305 startups. 2.2.1.3 Early Research on Accelerators Despite such a dramatic shift in startup support towards accelerators, the amount of published research on the topic is surprisingly low, partially because of the newness of this phenomenon. Most of the accelerators are in the nascent stage, which makes an academic examination of their performance difficult. Furthermore, the concept of accelerators is characterized by its ambiguous boundaries with other concepts, which has led to confusion with other support programs, such as business incubators. After the initial description of the phenomenon by Fishback et al. (2007), it took four more years for scholars to turn their attention to accelerators, with a discussion paper written by Miller and Bound (2011) on “The Startup Factories – The Rise of Accelerator Programs to Support New Technology Ventures.” Miller and Bound (2011) defined accelerators as “an application process that is open to all, yet highly competitive, provision of pre-seed investment, usually in exchange for equity, a focus on small teams not individual founders, time-limited support comprising programmed events and intensive mentoring, cohorts or ‘classes’ of startups rather than individual companies” (p. 3). While Miller and Bound’s (2011) definition remained close to the model of the first and most successful accelerator Y Combinator, the education program remains somewhat invisible in the definition, and it was later research that began to pay attention to the educational components. A frequently cited definition of accelerators was introduced by Cohen and Hochberg (2014) and acknowledged the educational trend: “A fixed-term, cohort-based program, including mentorship and educational components, that culminates in a public pitch event or demo day” (p. 5). While this definition covers some important aspects of this concept, it nevertheless omits the provision of seed investments and focuses on the peculiarities of batched entrepreneurs receiving education during a time-limited program. Early studies suggest a positive influence of accelerators on participating startups regarding their knowledge acquisition (Battistella et al., 2017; Hallen et al., 2017), the increase in their startup valuation (Kim & Wagman, 2014; Smith & Hannigan,

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2015), and the follow-up funding they receive (Fehder & Hochberg, 2015; Radojevich-Kelley & Hoffman, 2012). Apart from these studies on startup impact, scholars primarily targeted the conceptualization of accelerators (Cohen & Hochberg, 2014; Pauwels et al. 2016). One subset of accelerators is corporate accelerators, referring to those initiated by corporates. This particular type of accelerator has recently received increasing attention from practitioners and scholars (Kohler, 2016; Kupp, Marval, & Borchers, 2017). While early research predominantly focused on describing the phenomenon or its effects on startups, some studies also paid particular attention to the interdependencies of accelerators and their surrounding entrepreneurial ecosystems. Early findings suggest that accelerators positively impact the regions in which they are located (Fehder & Hochberg, 2015, 2018; Goswami et al., 2018). Fehder and Hochberg (2015) analyzed the impact of accelerators on entrepreneurial ecosystems by the availability and provision of seed and early-stage venture capital financing before and after the accelerator was established in the entrepreneurial ecosystems. Findings suggest that not only accelerator participants but also startups in the same entrepreneurial ecosystem who do not attend acceleration programs also profit from the presence of accelerators (Fehder and Hochberg, 2015). They explained this indirect benefit of accelerators’ presence as follows: “The arrival of an accelerator is associated with an annual increase of 104% in the number of seed and early-stage venture capital deals in the MSA (metropolitan statistical area), an increase of 289% in the log total dollar amount of seed and early-stage funding provided in the region, and a 97% increase in the number of distinct investors investing in the region” (Fehder and Hochberg, 2015, p. 3). Similarly, Feld, an American entrepreneur, investor, and co-founder of TechStars, argued for the importance of accelerators as instruments of ecosystem creation and their sustainable development (Feld, 2012). Over the years, accelerators as a concept evolved from the initial Y Combinator model of efficient seed investment towards a time-pressured educational program with various workshops and training (Fehder & Hochberg, 2015). Their role within entrepreneurial ecosystems changed from that of an investment entity to that of a support organization that trains entrepreneurs and provides them with valuable network access. This development is encapsulated in a recent comprehensive definition of accelerators proposed by Drori and Wright (2018): “An accelerator is a generic organizational form that aims to stimulate entrepreneurship. It is structured to provide an intensive, limited-period educational program, including mentoring and networking for the cohort of startup participants selected for each program, to improve their ability to attract investment following the demo day at the end of the program. Accelerators are organizations that serve as gatekeepers and validators of

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promising business innovations through their embeddedness in their respective ecosystems and, thus, take an active and salient role in socioeconomic and technological advancement” (p. 2). This comprehensive definition assigns accelerators a critical role within entrepreneurial ecosystems: They pre-select promising startups and provide them with legitimacy that helps them acquire resources, build networks, and scale up their businesses. Accelerators also help other ecosystem stakeholders, such as VCs, as the pre-selection of accelerator participants lowers the search efforts necessary for investors. Table 9 shows a summary of the three dominant definitions of accelerators. Table 9: Definitions of Accelerators

Definition “An application process that is open to all, yet highly competitive, provision of pre-seed investment, usually in exchange for equity, a focus on small teams, not individual founders, timelimited support comprising programmed events and intensive mentoring, cohorts or ‘classes’ of startups rather than individual companies”

Authors Miller and Bound (2011, p. 3)

A fixed-term, cohort-based program, including mentorship and educational components, that culminates in a public pitch event or demo day.”

Cohen and Hochberg (2014, p. 5)

“An accelerator is a generic organizational form that aims to stimulate entrepreneurship. It is structured to provide an intensive, limited-period educational program, including mentoring and networking for the cohort of startup participants selected for each program, to improve their ability to attract investment following the demo day at the end of the program. Accelerators are organizations that serve as gatekeepers and validators of promising business innovations through their embeddedness in their respective ecosystems and, thus, take an active and salient role in socio-economic and technological advancement.”

Drori and Wright (2018, p. 2)

2.2.2 Contrast Between Accelerators and Their Antecedents As visible in the origins of accelerators, presented in Section 2.2.1.1, accelerators were not created from a modification of existing support services, such as business incubators. The founders of Y Combinator simply wanted to enhance the efficiency and velocity of the learning processes of their angel investing. It was a pure

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coincidence that they created a new form of startup investing and startup support. Nevertheless, business incubators and business angels are commonly seen as the conceptual antecedents of accelerators (Cohen & Hochberg, 2014). Their similar characteristics lead to confusion among policymakers, researchers, and sometimes even support organizations themselves. In fact, some organizations call themselves accelerators even though they do not fit within this concept. Against this background, this section differentiates accelerators from their two antecedents: business incubators and business angels. 2.2.2.1 Accelerators Versus Business Incubators Terminological confusion between these concepts is significant among support organizations themselves. According to Hathaway (2016), fewer than one-third of the organizations in the US that identify themselves as accelerators accord with the definition provided by Cohen and Hochberg (2014). This confusion is partly responsible for the slow diffusion of the accelerator concept in research, as it is difficult to research a new phenomenon that is frequently confused with already well-researched concepts that have existed for many years. Consequently, the terms “accelerator” and “business incubator” are often used interchangeably, despite the striking differences of accelerators from the traditional business incubator model (Brown & Mawson, 2016; Cohen & Hochberg, 2014; Isabelle, 2013; Miller & Bound, 2011). Accelerators have idiosyncratic processes, dynamics, and outcomes (Gonzalez-Uribe & Leatherbee, 2018; Hallen et al., 2017; Stayton & Mangematin, 2018). However, accelerators are often merely described as a new form of business incubator (Hausberg & Korreck, 2018; Mian, Lamine, & Fayolle, 2016; Pauwels et al., 2016). One possible reason for this conceptual ambiguity is that business incubators themselves have experienced a transformative evolution over the last 40 years. Their initial objective was to support new ventures with affordable office space and access to shared technology (Hackett & Dilts, 2004), and office space, often in exchange for affordable rent, is frequently described as the central service of business incubators (Bergek & Norrman, 2008). Over the years, however, business incubators have begun to provide other essential services, such as access to copy machines, and later to offer their tenants support through professional services such as secretaries or consultancy and network facilitation (Hackett & Dilts, 2004; Sherman & Chappell, 1998). Consequently, research identified an increasing number of types of business incubators with various offerings and goals. Table 10, for instance, shows a categorization of incubators based on the value they add to their incubates. It distinguishes five types of incubators and sorts them under the three distinct value-adding mechanisms: real estate, collaboration, and business development.

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Table 10: The Business Incubator Continuum

Value-added through Real Estate For-profit property development incubators Real estate appreciation Sell proprietary services to tenants No interorganizational Collaboration

Collaboration

Business development Non-profit de- For-profit Academic For-profit velopment collabora- incubators seed-capicorporation in- tive incutal incubacubators bators tors Job creation Capitalize CommerCapitalize and enhancing collabora- cialization investment of the entre- tion and of univer- opporpreneurial cli- symbiotic sity re- tunity mate potentials search Regional/area Network Capitalize Secure development developinvestment availabilment and oppority to risk nurture tunity capital Interorganiza- Firm-firm University- No interortional collabo- collabora- industry ganizaration (multi tion collaborational colstakeholder tion laboration collaboration)

Adapted from Bøllingtoft & Ulhøi (2005)

Today, business incubators “are recognized by different names, such as technology/business incubators, innovation/technology centers, science/research/technology parks, and business/seed accelerators” (Mian et al., 2016, p. 2). The heterogeneity of incubating organizations has led to the definitional ambiguity of the concept (Hackett & Dilts, 2004) and to the transition of the term “incubator” from a well-defined property-based support organization into an umbrella term that describes a diverse set of organizations (Aernoudt, 2004; Bøllingtoft & Ulhøi, 2005). Unsurprisingly, the concept of incubators also suffers from a lack of consensus regarding its definition (Mian et al., 2016) and is frequently defined in various generic ways, for instance, as “a support-environment for startup and fledgling companies” (Peters, Rice, & Sundararajan, 2004, p. 83). This problem was

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recognized several decades ago by Kuratko and LaFollette (1987), who stated, “The task of defining what is meant by an incubator has become difficult since the original concept is being adapted to fit the needs of the economic areas” (p. 49). To accurately delineate accelerators from their conceptual ancestors, a more precise definition of incubators is necessary. According to Bøllingtoft and Ulhøi (2005), incubators are “an umbrella term for any organization that provides affordable office space and shared administrative services” (p. 268). This definition has a narrow focus on office space and shared administrative services, based on the historical nucleus of incubators that focus on supporting nascent firms. Scholars have added several types of services, such as networking opportunities (Bergek & Norrman, 2008) and access to professional services (Sherman & Chappell, 1998), but these elements are merely optional supplements. This definition clearly shows that business incubators are different from the accelerator model, which is primarily a short-term program with intensive mentoring and efficient seed investment into cohorts of companies. Another surprising, yet often neglected, factor to identify the conceptual difference between accelerators and business incubators is that Y Combinator has never offered office space or shared administrative services (Barnes, 2016). The office space supplement was added to the accelerator model later, by TechStars, to increase peer-to-peer feedback and only secondarily to provide a cost-free working environment to the participants. Malek et al. (2014) differentiated accelerators from incubators in the following five ways: i) accelerators have a highly competitive open-application process that has an end date due to acceptance in cohorts, while incubators have ongoing affiliation opportunities and often focus on regional applicants; ii) accelerators typically accept and nurture a much higher number of startup teams than incubators; iii) accelerators typically provide equity-based seed investments; iv) the duration of accelerator programs is much shorter than the time tenants usually stay in incubators, which leads to more rapid and intensive development of accelerator startups; v) peer-to-peer networking, learning and support are actively facilitated in accelerators. Furthermore, accelerators emerged from a profit-driven investor perspective, while most incubators are non-profit or simply charge a rental fee for the use of their facility (Yang, Kher, & Lyons, 2018). While incubators aim to shelter their tenants from rough market forces, accelerators do the opposite, demanding rapid market entry and validation of the startup’s value proposition from program participants (Cohen, 2013). Accelerators focus on learning and achieving rapid proofs of concept, while incubators try to extend financial runway through affordable

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office space and support (Hallen et al., 2017). The short duration of acceleration programs, with a demo day in the end, creates time pressure for program participants. Within a limited time, accelerators focus on making startups ready to scale their business, while incubators focus on producing startups and assisting idea development for a more extended period (Brown & Mawson, 2016). Accelerators, as the name suggests, “accelerate” processes to make startups investor-ready. Incubators, by contrast, are oriented towards creating a controlled environment for startups to ensure that they do not die, which can create a “life support trap” (Mian et al., 2016, p. 6). Table 11 summarizes the differences between accelerators and incubators. Table 11: Summary of Differences Between Accelerators and Incubators

Criteria Application process

Incubator Ongoing process

Number of accepted members Duration of program Market forces

Low

Central process Goal

Incubate startups Prevent startup failure

Originated from

Shared office space and administration services

application

Long Give startups shelter

Accelerator Highly competitive open application process with a deadline High Short Demand early market validation Startup learning Make startups investorready Institutionalized angel investing

2.2.2.2 Accelerators Versus Business Angels Cohen (2013, p. 7) posed the question of whether it is meaningful to group accelerators and incubators as similar organizations and instead suggested that accelerators “may actually have more in common with angel investors,” as both invest in startups and follow the same goals of helping them scale up. Angel investors or “business angels” are “defined as high net worth individuals who invest their own money directly in unquoted businesses in which they do not have a family connection” (Mason & Harrison, 2015, p. 44). In addition to their provision of capital, business angels are often actively involved in their portfolio ventures, offering founders valuable advice, support, and connections (Paul, Whittam, & Wyper, 2007).

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The genesis of the first accelerator, Y Combinator, already indicates a close link to business angels. While the founders never considered best practices from incubators, their goal was primarily to improve their angel investing. Similarly, most accelerator managers of the first wave of accelerators, such as Y Combinator and TechStars, used to be entrepreneurs or active business angels. Cohen (2013) described this fact as an important difference from incubators, which are mostly managed by managers without prior startup or investment experience. Interestingly, none of the accelerator managers who participated in her study had prior experience as incubator managers. In contrast, almost all accelerator managers had been business angels before joining accelerators, often with their own startup experience. This practical background of accelerator managers enormously improves the acceleration processes of startups, including startup selection and the provision of advice on a continuous basis (Cohen, Fehder, Hochberg, & Murray, 2019; Wise & Valliere, 2014). From the contributions of accelerators in the area of startup support, one can even argue that accelerators apparently institutionalize the angel investing process in an alternative form. The open but competitive application phase helps to channel promising startups towards the selection process. The time-compressed program with a group of startups helps to improve the process of advising the startups, creating various opportunities to positively influence the entrepreneurial process because the advisors stay up to date during the program. Once startups grow and reach a certain stage, in which business angels cannot offer sufficient support by themselves, business angels usually channel their portfolio startups towards venture capital investments with higher valuation so that their startups can further grow (Madill, Haines, & Riding, 2005). The demo day refers to an event that accelerators organize during and at the end of the program, to which they invite investors and let their program participants present and pitch to them. These accelerator characteristics all suggest that accelerators can be understood as the largescale institutionalization of business angels’ activities. 2.2.2.3 Diversification of Accelerators Similar to how incubators have evolved, as presented in Section 2.2.2.1, the accelerator concept has recently undergone change as well. On the one hand, a growing number of incubators recently started to adopt elements of accelerator programs, and they tend to re-name their programs accelerators. On the other hand, new initiators of acceleration programs whose primary focus is not startup investment have aligned the accelerators to new goals, such as fostering regional development. This led to the adaptation of non-accelerator practices and a convergence towards incubator models.

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An interesting fact about accelerators is that Y Combinator, which is commonly considered to be the first and most successful accelerator in the world, does not label itself as an accelerator. This fact may be attributed to this dilution of the traditional acceleration approach. Instead of calling itself an accelerator, Y Combinator describes itself as an organization that “provides seed funding for startups. (…) The most important thing we do is to work with startups on their ideas. We are hackers ourselves, and we have spent much time figuring out how to make things people want. So, we can usually see fairly quickly the direction in which a small idea should be expanded, or the point at which to begin attacking a large but vague one” (“Y Combinator,” 2014). This simple and straightforward approach to the accelerator model is centered around the provision of resources, but, even more importantly, around the transfer of unique tacit knowledge as well, thereby providing participants with unique competitive advantages. Accelerators with managers without their own startup experience tend to concentrate on the transfer of explicit knowledge, which they can acquire without having experience as entrepreneurs. Y Combinator further dissociates itself from the evolution of other accelerators towards a structured educational program: “Y Combinator is occasionally described as a boot camp, but this is not really accurate. We probably get called that because we fund many startups at once, and most have to move to participate. However, the similarities end there; the atmosphere is the opposite of regimented” (“Y Combinator,” 2014). Y Combinator emphasizes that it does not have a structured program, because every startup has its unique challenges. Therefore, startups decide for themselves how to use the support offered by accelerators. While the trend of the accelerator phenomenon has moved away from the traditional approach and become a more structured, time-compressed education program, the differences between it and its conceptual antecedents, the incubator and business angels, remain prominent. Against the background, the next section reviews recent publications on accelerators to argue the scope and characteristics of accelerators. 2.2.3 Characteristics of Accelerators As discussed in the previous section, the scope and nature of accelerators have become increasingly diverse, since an increasing number of organizations have begun to imitate acceleration models and implement similar programs in different contexts from the initial context of the first generation of accelerators, such as Y Combinator and TechStars.

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The following sections elaborate on the nature and scope of accelerators in more detail, paying particular attention to the peculiarities of accelerator characteristics. Section 2.2.3.1 presents vital elements of the structure and processes of accelerators. Section 2.2.3.2 describes the benefits that program participants obtain from accelerators. Finally, Section 2.2.3.3 introduces the determinants of accelerators. 2.2.3.1 Temporality and Process of Accelerators As accelerators have attracted the interest of policymakers, corporates, and startups worldwide, their organizational structure and aims have become increasingly diverse. However, there are a few common elements that characterize accelerators as a specific form of organization. Several researchers have attempted to highlight the distinctive nature of accelerators. For instance, the time limitation of acceleration programs and the frequent arrivals of new cohorts creates unique dynamics and constant fluctuation among accelerator participants. By capturing the nature of temporal existence, Drori and Wright (2018) described accelerators as “temporary organizations” (p. 5). They argued that accelerators are generally composed of three internal and two external characteristics. The internal characteristics are ownership of the program’s sponsor, the program’s structure, and the acceleration process, and the external are the accelerators’ connection to the entrepreneurial ecosystem and the validity and legitimacy with which accelerators provide their participants. Drori and Wright (2018) also presented the lifecycle of the accelerator process from the perspective of accelerator management (Figure 12). The left side of this model shows contextual determinants for acceleration programs, such as the type of ownership and political environments. On the right side, the entire process of an accelerator for each cohort is visualized. The first step is to identify potential participants, which then leads to the selection process. Once qualified startups for a cohort are selected, the accelerator starts offering programs for their participants. This program usually ends with demo days, in which the accelerator invites external investors to bridge cohort startups and future investors. Once the program is completed, the accelerator regularly assesses the impact of its acceleration program for instance by considering the survival rate and firm valuation of its “alumni” startups.

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Candidate Sourcing

Accelerator Context Life-cycle Owndership Type Governance Sector Location Policy

Cohort Selection Process Accelerator Program Demo Days Exit to Next Stage Assessment of Performance

Figure 12: Accelerator Process Lifecycle Source: Drori and Wright (2018)

2.2.3.2 Benefits for Accelerator Program Participants Accelerator participants especially benefit from access to the unique resources of the accelerator. Wise and Valliere (2014) summarized the unique value of accelerators with the three key elements, (i) mentorship and learning, (ii) connectivity and network, and (iii) signaling and legitimacy, for the participating startups. The first unique benefit of accelerators is the efficient and rapid transfer of specific entrepreneurial knowledge. Most learning in accelerators is driven by intensive, customized mentoring and consultation in a vibrant environment of mutual learning (Hallen et al., 2017; Miles et al., 2017). Mentoring and consultation are offered and implemented by accelerator managers and experts from outside the accelerator. The quality, personality, and backgrounds of participants also significantly impact the learning dynamics and outcomes within accelerator programs, as they share knowledge and feedback with their peers (Malek et al., 2014). The second way startups can benefit from accelerators is access to networks, which helps them build social capital. During and even after the program, accelerators proactively and purposefully integrate their participants into their heterogenous network so that startups can benefit from their social capital (Brown et al., 2019).

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Apart from supplying participants with these resources, accelerators also provide them legitimacy. Most accelerators have low acceptance rates to maintain the high quality of participating startups and interactions among them during the program. The fact that a startup is participating or has participated in a certain acceleration program indicates the high quality of the startup and its access to resources, such as the accelerator’s network, knowledge, and financial capital. Therefore, attendance in especially prominent acceleration programs is an indicator to external investors of the quality of a startup. 2.2.3.3 Determinants of Accelerators While the history of research on accelerators is still in its infancy, Pauwels et al. (2016) offered one of the first comprehensive conceptualizations of accelerators. They applied the design lens of business modeling by Zott and Amit (2010) to discover key elements and dominant themes of accelerators. Analyzing in-depth interviews with managers from 13 accelerator programs, they identified 17 constructs, organized into five common accelerator design elements (Figure 13): (i) program package; (ii) strategic focus; (iii) selection process; (iv) funding structure; and (v) alumni relations. The program package forms the center of the accelerator, consisting of all services that the accelerator offers its participants. Within this package, Pauwels et al. (2016) distinguished between mentoring and counseling. While mentoring is irregularly provided by experienced external individuals, such as entrepreneurs or other experts, the counseling service is comprised of coaching that is offered by the accelerator management team. Today’s accelerators often rely on external resources, with managers merely facilitating them, which differs from the Y Combinator model, in which managers, themselves experienced entrepreneurs, are the main source of counseling. Both mentors and the counseling service from the management team help entrepreneurs carve out their value proposition and improve their overall business model. Furthermore, they often connect startups to potential customers, investors, or business partners. The third construct of the program package is the curriculum and training offered by accelerators, which provide a standardized structure for the length of the program and include pitch training or workshops on topics such as marketing or finance. The vast majority of accelerators nowadays offer location services in the form of coworking space to their participants. The main purpose of this shared working environment is to facilitate collaboration between participants, especially peer-to-peer feedback. Nevertheless, a majority provide seed capital investments, which is one of the main factors distinguishing accelerators from incubators. Finally, every accelerator program package ends with a demo day, wherein the

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participants present their startups to investors (van Werven, Bouwmeester, & Cornelissen, 2019).

Program package

Strategic focus

Selection process

Funding structure

Alumni relations

Mentoring services

Industry / sector focus

Online open call

Investor funding

Alumni network

Curriculum / training program

Geographical focus

Use of externals for screening

Corporate funding

Post program support

Team as primary selection criterion

Public funding

Counseling services Demo days / investor days

Alternative revenues

Location services Investment opportunities

Figure 13: Design Elements and Constructs of Accelerators Source: Pauwels et al. (2016)

The second accelerator design element of Pauwels et al. (2016) conceptualization is a strategic focus, which defines basic strategic selection criteria. While early accelerators were agnostic towards the background of potential participants, today’s accelerators often focus on one of the two constructs of industry and geography. In particular, corporate accelerators tend to focus on the industry of their mother corporation. Public accelerators that are funded by governments tend to have a location-specific developmental focus as their interest lies in the increase in entrepreneurial capital within their respective regions. The third design element of accelerators is the selection process. Selecting qualified participants is crucial, as peer-to-peer feedback has become central to the value proposition of accelerators (Assenova, 2019; Kwon, Hwangbo, & Lee, 2019; Yin & Luo, 2018). Furthermore, the quality and entrepreneurial capacity of participating startups determine the output of acceleration programs, with a successful output naturally attracting future participants and investors. Pauwels et al. (2016) identified three constructs of the selection process: (i) online open calls, (ii) the

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use of externals for screening, and (iii) startups with teams instead of solo founders as a primary selection criterion. The selection process of accelerators is usually multi-staged and rigorous, beginning with an online open call that is sometimes supplemented with active scouting by the accelerator. The standardized screening process often relies on external stakeholders to better handle the high number of applications or to compensate for the lack of entrepreneurial expertise within the management teams. Accelerators usually take the first step for the selection based on written documents and videos, which is then followed by a screening in person. Many accelerators sort out startups with solo founders, as teams are perceived as more suitable for the intense acceleration program. The fourth design element of accelerators concerns the funding structure of the accelerators. Most accelerators receive their funding from crucial ecosystem stakeholders, such as private investors, corporates, and public authorities (Cohen et al., 2019; Drori & Wright, 2018). Such sponsors strongly influence the accelerators’ objectives and the recruitment of the management team (Drori & Wright, 2018). Both factors determine the benefits that startups can gain from their participation in an accelerator. Wise and Valliere (2014) specifically examined the degree to which the management team’s startup experience and their connectedness to the entrepreneurial ecosystem impacts the performance of startups within accelerators. They found that personal knowledge, skills, and experience from their own startup endeavors of accelerator management significantly decreased the failure rate of participants. Counterintuitively, the connectedness of accelerator management to the entrepreneurial ecosystems had no effects on the failure rates of accelerator participants (Wise & Valliere, 2014). They proposed five reasons for the importance of the startup experience of accelerator managers: i) The managers are better at screening and selecting startups; ii) Their advice on startup-specific topics is better; iii) Their experience of the entrepreneurial process makes them more aware of the need for flexibility and of the heterogeneity of startup challenges and ways to grow; iv) Managers have more individual credibility with participants, which enhances the effect of the formers’ advice; and v) Their experience helps them spot synergies and opportunities for collaboration among participants and the extended network. Wise and Valliere (2014) argued that the benefits of accelerator managers with own startup experience cannot be substituted with resources from the entrepreneurial ecosystem, as external mentors are not fully involved in day-to-day operations. Their distance from startups prevents these external mentors from offering

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instant help and means that program participants are provided with less vigorous insights and advice concerning their entrepreneurial challenges. However, there is a mixed view on the connection between accelerators and ecosystem stakeholders in literature. In contrast to the findings of Wise and Valliere (2014), Seet, Jones, Oppelaar, and Corral de Zubielqui (2018) investigated the enhancement of human capital in relation to social capital in the context of an accelerator and came to another conclusion. With regard to participants’ learning, they emphasized the importance of connections of accelerators to critical stakeholders in the entrepreneurial ecosystem, such as mentors, industry experts, peers, or potential customers. Their direct and customized interventions are more effective than formal educational components, such as standardized training and workshops. Instant access to suitable stakeholders, such as mentors, when needed, is enhancing the learning process of accelerator participants. The last design element of the accelerator conceptualization of Pauwels et al. (2016) is the relationship with the alumni. Accelerators attempt to stay in close contact with their alumni, as they are potential providers of resources in the future. The network of alumni can become a powerful tool with future mentors, investors, or first customers for the current and future participants. Furthermore, some accelerators invested seed capital into their participants and looked for future exit opportunities. Occasionally, accelerators experimented with post acceleration programs, moving them closer to the incubator model. The relationship is usually fostered by alumni events and networks. While the strategic focus and funding structure are general design elements with only indirect influence, the other three design elements selection process, program package, and alumni relations directly impact the overall acceleration mechanism. The selection process decides who enters the acceleration program and occurs before the start of the program. Program participants should be regarded as an integral part of the accelerator, for participating startups significantly influence the organizational culture and aims of the accelerator. The program package defines the structure and content of the actual acceleration process. After the demo day, the post-acceleration process starts. Tying former participants to the accelerator facilitates alumni networks. 2.2.4 Classification of Accelerators All accelerators share similar building blocks, but their individual characteristics and configuration are different, depending on the accelerators’ objectives. Based on their five design elements, Pauwels et al. (2016) derived three idiosyncratic types of accelerators depending on how their programs configure the design elements. This accelerator architecture is typically influenced by the sponsor of the accelerator (Cohen et al., 2019; Drori & Wright, 2018).

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Table 12: Accelerator Classification

Design theme Program package

Corporate Accelerators “Matching customers with startups and build corporate ecosystems” Mentoring provided by internal coaches from corporates No seed investment or equity engagement

Strategic focus

Mix of generalists and specialists International focus

Selection process

Favor new ventures in later stages with some proven track record Funding from corporates

Funding structure

Alumni relations Cases

Establish infrastructures to build alumni services Fintech Innovation Lab, Microsoft Venture Accelerator, Healthbox Europe

Investor Accelerator

Public Accelerator

“Identification of investment opportunities for investors” Mentoring provided by serial entrepreneurs and business angels Standard seed investment and equity engagement

“Stimulation of startup activity and economic development” Mentoring provided by serial entrepreneurs and business developers: most extensive curriculum Mostly seed investment and equity engagement Mostly generalists Local and/or international focus

Mix of generalists and specialists Local and/or international focus Favor new ventures in later stages with some proven track record Funding from private investors (business angels, venture capital funds and/or corporate venture capital)

Establish infrastructures to build alumni services Techstars London, Startup-bootcamp Berlin, ProsiebenSat.1 Accelerator, Axel Springer Plug and Play Accelerator,

Favor very early stage new ventures Funding from local, national, and international schemes; Experimenting with funding structure and revenue model (search for sustainability) Establish infrastructures to build alumni services Establish infrastructures to build alumni services Climate-KIC Europe, Scientipole Initiative, Le Camping

Source: Adapted from Pauwels et al. (2016)

The accelerator typology of Pauwels et al. (2016) is helpful to gain a better understanding of different accelerator models depending on their overarching goals.

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However, as they named these three accelerator types somewhat peculiarly (Bliemel et al., 2016), this study relabels them to avoid confusion (Table 12). The first design theme of Pauwels et al. (2016) refers to the traditional investordriven accelerator model, and they call it the deal-flow maker, as the primary target is to facilitate the deal-flow of the investors by identifying promising investment opportunities. Henceforth, this study refers to this model as the investor accelerator, as it is driven by startup investments. The second type of accelerator is either managed or sponsored by corporates and is termed by Pauwels et al. (2016) as an ecosystem builder, as it aims to extend the corporate business ecosystem. This might confuse readers, as the term “ecosystem” is used in this study with regard to entrepreneurial ecosystems (as discussed in Section 2.1.4), for which reason this type of accelerator is henceforth called a corporate accelerator. The aim of the third accelerator type of Pauwels et al. (2016) is to develop the entrepreneurial ecosystem, and they refer to this type as a welfare stimulator. These accelerators are typically funded by public authorities and are henceforth referred to as public accelerators. Naming these accelerator types after their sponsors provides the reader with more clarity regarding their nature. Classifying the different accelerator types is helpful for understanding the peculiarities of the public accelerator, to which end the following sections introduce each type of accelerator. 2.2.4.1 Investor Accelerators Investor accelerators refer to the original accelerator model introduced by Y Combinator, which is driven by private investors who have often themselves been entrepreneurs. These accelerators institutionalize seed investment into startups, which they combine with intense mentoring and consultation during the short-term cohort-based program. Their objective is to bridge the equity gap between projects that search for a viable and scalable business model and investment-ready startups that have shown revenue traction and are ready to scale. This focus on small equity investments into early-stage startups in combination with customized support in business development is similar to angel investing (Cohen & Hochberg, 2014; Mason & Harrison, 2015). Accelerators institutionalized the processes of business angels, which allowed them to make seed investments more efficiently and on a larger scale, for batching several startups into cohorts increases the efficiency of resource distribution and leads to large, supportive networks. The time-compressed program demanded more efficiency in startup support with a focus on customer-centered product development that allowed startups to make early sales. By doing so, private accelerators not only help bridge the equity gap but also accelerate the progression of startups towards investor-readiness (Pauwels et al., 2016).

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Due to their equity stake, the goals of private accelerators are closely aligned with the objectives of startups (Yang et al., 2018). 2.2.4.2 Corporate Accelerators Corporate accelerators recently received particular attention from researchers due to the rapid worldwide increase in the corporate sponsoring of acceleration programs (“Gust,” 2016). Corporate accelerators are primarily described as an open innovation tool for corporates (Jackson, Richter, & Schildhauer, 2017; Richter, Jackson, & Schildhauer, 2018), actively involving corporate stakeholders and networks in the acceleration process to create innovation. To select participants, they often rely on corporate executives; for mentoring, they choose corporate specialists; and the post-acceleration process is often driven by corporate innovation or corporate venturing departments (Pauwels et al., 2016). Corporate accelerators are highly heterogeneous in nature, as the goals and objectives specified by the mother corporations can substantially vary (Kanbach & Stubner, 2016). To better differentiate corporate accelerators, Kanbach and Stubner (2016) proposed a corporate accelerator typology with four distinct types: (i) listening post, (ii) value chain investor, (iii) test laboratory, and (iv) unicorn hunter. While the first three types are somehow connected to the core business of the corporation and involve long-term strategic orientation, while the unicorn hunter is industry– and business model–agnostic and only driven by financial purposes. It most resembles the private accelerator model, as it aims to find and develop suitable investment opportunities that will later yield high returns. The opposite type is the listening-post corporate accelerator, which is purely driven by strategic orientation and has no direct financial objectives. Consequently, it usually does not provide seed investment, and the benefits for the participants are mainly derived from the corporate network. The objectives of the listening post and the test laboratory are mainly explorative, as these corporate accelerators are directed towards learning in unknown territory. The value-chain-investor corporate accelerator also has an exploitative investment-driven component. They invest in startups from a particular industry typically along their own value chain with the goal of a beneficial long-term relationship. Their main objective is to identify and develop these startups in areas that are linked to but do not replace the corporate core business. While the objectives of corporates and startups often differ, entrepreneurs can usually take advantage of corporate networks and expertise.

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2.2.4.3 Public Accelerators Public accelerators are the last type of accelerators in the typology suggested by Pauwels et al. (2016), who referred to them as welfare stimulator, since their objective as a publicly funded acceleration program is usually the stimulation of startup activity and subsequently of the entrepreneurial ecosystem and the regional economy as a whole. As government agencies are the main stakeholder and sponsors of the program, these accelerators tend to be more regulated and are usually not allowed to take equity from startups. Nevertheless, they often provide seed capital in order to attract more potential participants. The selection criteria and the overall acceleration process of public accelerators are usually aligned with the regional development goals of their public sponsors. The startups of the participants are often pre-market entry without well-defined value propositions (Pauwels et al., 2016), and the acceleration program is thus often dominated by educational components, aiming to enhance entrepreneurial competencies and skills (Yang et al., 2018). Before the worldwide diffusion of the accelerator model as a new promising means of startup support, government agencies were already using public incubators as a means to stimulate the local economy (Aernoudt, 2004; Mian, 2016). While their objectives are similar, public accelerators distinguish themselves from public incubators by focusing on startups with high-growth potential (Brown & Mawson, 2016) and by applying the fundamental principles of the acceleration process (Pauwels et al., 2016). According to some scholars, there is a risk that governments merely modify former support programs and launch them under a new banner, in this case, that of accelerator. This risks diluting their effectiveness as past mistakes are reiterated (Brown & Mawson, 2016). To sum up, scholars generally agree that there are different types of accelerators, which differ in their program package, strategic focus, selection process, and funding structure. Section 2.2.4 presented three distinctive types of accelerators: investor accelerators, corporate accelerators, and public accelerators. While any accelerator can become a potential anchor tenant, this study particularly focuses on public accelerators since they can act as anchor tenants representing the top-down approach to ecosystem development. 2.3 Research Gaps and Research Questions This study reviewed the literature on entrepreneurial ecosystems in Section 2.1 and the literature on accelerators in Section 2.2. This section identifies three critical aspects to derive research gaps based on literature and thence derives the guiding research questions of this study (Figure 1). The first aspect is that extant

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research does not offer sufficient explanations of the mechanism guiding the early development of entrepreneurial ecosystems. The second, related research gap is a lack of investigation into the roles of the anchor organizations that can create ecosystem dynamics in the early stage of entrepreneurial ecosystem development. The third aspect illuminates the role of public accelerators as anchor tenants. 2.3.1 Early Development of Entrepreneurial Ecosystems The first research gap is that extant research does not adequately consider the early development of entrepreneurial ecosystems, primarily in three ways: (i) Early research on entrepreneurial ecosystems ascribes to the latter a static nature; (ii) limited understanding of the evolutionary nature of entrepreneurial ecosystems; and (iii) there is a lack of research on nascent entrepreneurial ecosystems. First, the extant research on entrepreneurial ecosystems has been criticized for the static nature that it attributes to entrepreneurial ecosystems, and the conceptual frameworks that have been developed tend merely describe the components and actors involved in the ecosystems. These fail to reveal the complex dynamics of ecosystem evolution and heterogeneous interactions among ecosystem actors (Alvedalen & Boschma, 2017; Colombo et al., 2019; Stam, 2015). Section 2.1.4.1 presented several examples of ecosystem conceptualization that bore a strongly descriptive nature. The identification of critical elements, such as material attributes, knowledge, social capital, and culture, that influence the development and output of entrepreneurial ecosystems is an essential step to start the investigation of this phenomenon (Brown & Mason, 2017; Spigel, 2017). However, listing ecosystem determinants without exploring and elaborating upon their impact on the evolutionary nature of entrepreneurial ecosystems offers only limited understanding of the underlying mechanisms of ecosystem development. As Roundy et al. (2018) argued, entrepreneurial ecosystems can be understood as complex adaptive systems characterized by the six distinctive characteristics presented in Section 2.1.4.4 – (i) emergence through self-organization, (ii) open but distinct boundaries, (iii) complex components, (iv) non-linear dynamics, (v) adaptability through dynamic interactions, and (vi) sensitivity to initial conditions. Given the nature of entrepreneurial ecosystems as complex adaptive systems, research calls for alternative approaches to allow scholars to investigate the complex and dynamic aspects of entrepreneurial ecosystems. Second, scholars have in several studies made concrete steps to tackle this particular problem and illuminate the evolutionary nature of entrepreneurial ecosystems, as presented in Section 2.1.4.2. These efforts were made first by Mack and Mayer (2016) in their attempt to develop an initial evolutionary model by applying the product lifecycle concept to the context of an entrepreneurial ecosystem. Section 2.1.4.2 also introduced Brown and Mason’s (2017) binary typology of entrepreneurial ecosystems that suggests an evolution of entrepreneurial ecosystems from

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nascent ecosystems with few entrepreneurial activities to well-developed ecosystems with large numbers of diverse interdependent actors, resources and entrepreneurial activities. They made contributions by demonstrating several evolutionary dynamics of entrepreneurial ecosystems, such as entrepreneurial recycling and the differences thereof between nascent and well-developed ecosystems. Spigel and Harrison (2018) proposed a similar model with one additional transformation stage. Their contribution lies in their focus on the processes of attraction, creation, recycling, and flow of resources, which are supported by high levels of connectivity among actors, as well as on cultural support. Their basic argument is that an ecosystem strengthens when it improves in all of these areas. Colombelli et al. (2019) highlighted the self-reinforcing interactions among ecosystem actors by emphasizing the role of anchor tenants as central players. They proposed the transition of entrepreneurial ecosystems from a hierarchical design towards a relational design as they evolve over time. As elaborated in Section 2.1.4.2, these studies represent essential foundation whence to initiate scholarly discussions on the evolutionary nature of entrepreneurial ecosystems. However, each approach offers explanations for only a limited aspect of the ecosystem evolution, and the entire mechanism remains unclear. Notably, a better understanding of the early evolutionary development of entrepreneurial ecosystems is needed, since most of the entrepreneurial ecosystems worldwide have not reached the entry-level of the ecosystem evolutionary process and remain in a nascent stage (Brown & Mason, 2017). However, extant literature does not offer any knowledge regarding how a nascent entrepreneurial ecosystem can move forward to come closer to a resilient self-sustainable entrepreneurial ecosystem (Brown & Mason, 2017; Colombelli et al., 2019; Spigel & Harrison, 2018). Third, scholars have predominantly investigated successful ecosystems in previous research and paid limited attention to nascent entrepreneurial ecosystems. Spigel and Harrison (2018) criticized the tautology of investigating the success mechanisms of already-thriving entrepreneurial ecosystems, noting that the scholarly preference to investigate well-developed entrepreneurial ecosystems can provide a limited understanding of the development mechanism of nascent entrepreneurial ecosystems. To elaborate in this respect, Section 2.1.4.3 presented a process view of entrepreneurial ecosystems, highlighting the research contributions of Spiegel and Harrison (2018). They advocated conceiving of the development of entrepreneurial ecosystems as a process in which a nascent entrepreneurial ecosystem transforms into a strengthening one. However, few studies have applied the process view to research on entrepreneurial ecosystems. Therefore, it remains unclear which actors and components influence the process of ecosystem evolution and how they enable or hinder it. Current research calls for further

82

2 Conceptual Background

investigations on the process whereby a nascent entrepreneurial ecosystem can progress to a more well-developed entrepreneurial ecosystem. Against this presented background, this study addresses the research gap that extant research does not sufficiently explain how a nascent entrepreneurial ecosystem develops to the next stages. 2.3.2 Top-Down Approach by Anchor Tenants The second research gap concerns the governance structure of entrepreneurial ecosystems. While practitioners and policymakers commonly tend to seek best practices to offer universal solutions, ecosystem scholars have cautiously warned that such isomorphic approaches neglect each ecosystem’s idiosyncratic institutional characteristics, which are formed through diverse events in the history of the region (Alvedalen & Boschma, 2017; Baron & Freiling, 2019; Brown et al., 2019; Stam, 2015). Each ecosystem has a unique history and structure and unique actors, conditions, and environments, all of which require it to develop an original approach to govern the ecosystem tailored to its own context. In an editorial remark in a recent special issue on the governance of entrepreneurial ecosystems in Small Business Economics, Colombo et al. (2019) introduced two different approaches to early entrepreneurial ecosystem governance and the initiation of internal dynamics, namely, top-down and bottom-up approaches. While they emphasized the importance of hybrid governance in both approaches, not every region can begin with a bottom-up approach. For instance, Mason and Brown (2014) noted that the region in which an entrepreneurial ecosystem naturally emerges already has institutional conditions that facilitate the entrepreneurial activities of startups. This argument implies that someone must proactively take action in a top-down manner when such supportive institutional environments and essential entrepreneurial resources are not available in the region. One possibly effective top-down approach is driven by anchor organizations, which play a critical role in the early development of entrepreneurial ecosystems. As discussed in Sections 2.1.4.2 and 2.1.4.3, anchor organizations refer to central ecosystem stakeholders that catalyze dynamics within the entrepreneurial ecosystem by strongly and directly influencing other potential ecosystem actors and stimulating their interactions (Colombelli et al., 2019; Spigel & Harrison, 2018; Theodoraki, Messeghem, & Rice, 2017). The impact of anchor organizations is considered larger during the birth and early-development phases of entrepreneurial ecosystems, as there are fewer other actors and fewer interactions (Colombelli et al., 2019). 2.3.3 Public Accelerators as Anchor Tenants in Nascent Ecosystems According to Colombelli et al. (2019), different types of organizations or individuals can play the role of anchor tenants, including governments, universities, or

2.3 Research Gaps and Research Questions

83

unicorn-startups. This study selected public accelerators as a focused type of anchor organization for mainly two reasons. First, the emergence and rapid growth of accelerators worldwide have made an enormous impact on the global startup scene, as seen in Section 2.2.1. This new phenomenon has recently also begun to receive scholarly attention (Brown et al., 2019; Cohen et al., 2019; Drori & Wright, 2018; Fehder & Hochberg, 2018; Pauwels et al., 2016; Seet et al., 2018). Accelerators changed the rules of the game in startup support by institutionalizing various activities that have been previously conducted by individual angel investors. Since accelerators have an impact not only on startups who participate in their programs but also on stakeholders within the ecosystems, many scholars in entrepreneurial ecosystems frequently named accelerators as a critical resource provider within the ecosystem (Brown & Mason, 2017; Brown et al., 2019; Goswami et al., 2018; Spigel & Harrison, 2018). Second, public accelerators naturally represent a top-down governance approach due to their very nature, namely, that they are initiated and managed by public entities such as national and regional governmental organizations or economic development agencies. While there are various forms of accelerators, as presented in Section 2.2.4, public accelerators have attracted special attention from global policymakers who seek an effective top-down approach to develop and govern entrepreneurial ecosystems in their own regions. As presented in Section 2.2.4.3, Pauwels et al. (2016) emphasized that public accelerators aim to stimulate the developmental dynamics of the local entrepreneurial ecosystem. Despite their potential in top-down ecosystem governance, the research on public accelerators is surprisingly scarce. Accordingly, the investigation of the potential roles of public accelerators as anchor organizations in the emergence and early development of entrepreneurial ecosystems with the consideration of their peculiarities (presented in Section 2.2.4.3) contributes to ongoing scholarly and political discussions regarding ecosystem governance. This study examines the role of public accelerators as anchor organizations aiming to facilitate the evolutionary dynamics of nascent entrepreneurial ecosystems. First studies on accelerators and ecosystems suggest that accelerators’ activities enrich the resource base of their regional entrepreneurial ecosystems. Scholars argued for accelerators as institutionalized dealmakers who foster relational interactions by facilitating the creation of startups’ and stakeholders’ communities and social capital within the entrepreneurial ecosystem (Brown & Mason, 2017; Brown et al., 2019; Drori & Wright, 2018; Fehder & Hochberg, 2015; Goswami et al., 2018; Roundy, 2017). These scholars illuminated different types of accelerator activities related to entrepreneurial resources, such as the intermediation of resources within the ecosystem (Brown & Mason, 2017; Brown et al., 2019; Fehder & Hochberg, 2015), resource transfer between accelerators and their startups on the one hand

84

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and ecosystem stakeholders on the other (Drori & Wright, 2018; Goswami et al., 2018), and the creation of entrepreneurial role models and a startup culture (Fehder & Hochberg, 2015; Roundy, 2017). While their studies demonstrated a few possible ways in which accelerators can develop resources in the ecosystem context, they generally failed to examine the interrelations between their development of ecosystems’ resources and the evolutionary dynamics of entrepreneurial ecosystems. This study also investigates the transformation of roles of public accelerators as anchor organizations within entrepreneurial ecosystems during the course of ecosystem evolution. Colombelli et al. (2019) explored how the role of anchor organizations within the ecosystem can change as the ecosystem evolves. They argued that anchor organizations play a dominant and critical role in creating initial evolutionary dynamics in the early stage of ecosystem development. In this stage, their approach has a strong top-down and hierarchical nature. As the ecosystem evolves, the number of startups and ecosystem stakeholders grows, interactions between actors become increasingly intensive, and anchor organizations’ impact on the entrepreneurial ecosystem becomes less significant. This transition is essential for the self-sustainability and resilience of entrepreneurial ecosystems and naturally changes the role of anchor organizations within the ecosystem, and the organizations’ approach is merged with numerous bottom-up approaches initiated by other ecosystem actors, resulting in the shift in the ecosystem’s governance structure from hierarchical to heterarchical. It is therefore essential to investigate the transition of the roles of public accelerators to integrate the transformation process over time. Complex adaptive systems offer additional explanations of this transformation regarding the role of anchor organizations. An entrepreneurial ecosystem is a complex system that is continuously altered by the individual actions of its various interdependent agents and cannot be universally directed or controlled by a single agent (Roundy et al., 2018). Instead, the evolutionary path of an ecosystem is driven by the aggregated interactions of its individual agents. While this nature does not allow an ecosystem to have a universal top-down control, it does not rule out that some agents have more influence on ecosystem evolution than others. The number of agents determines the degree of ecosystem complexity, with fewer agents and interactions associated with less complex systems wherein the impact of each agent on the entire ecosystem is proportionally more significant. Based on the discussion above, the following overarching question of this study is formulated: “How do public accelerators influence the early evolution of entrepreneurial ecosystems as anchor tenants?” This overarching question is accompanied by three concrete research questions as follow:

2.3 Research Gaps and Research Questions

85

RQ1: How do public accelerators inject resources into nascent entrepreneurial ecosystems? RQ2: How do public accelerators organize resources within nascent entrepreneurial ecosystems? RQ3: How can entrepreneurial ecosystems become independent from their anchor tenants? To answer these research questions, this study conducts a single case study with Start-Up Chile, a public accelerator initiated by a Chilean governmental agency, in the Santiago entrepreneurial ecosystem. The next chapter presents this study’s methodological approach in detail.

3 Methodology This chapter explains the methodological approach adopted in this study and is divided into four sections: (i) research design, (ii) empirical data, (iii) data analysis, and (iv) validity and reliability. 3.1 Research Design 3.1.1 Philosophical Worldview This study selected social constructivism as a philosophical worldview (Kukla, 2013). Social constructivism emerged to oppose the philosophy of objectivism and postpositivism, which embraces the value of universal truth in science based on the assumption that reality can exist “out there.” In other words, positivism assumes that reality is waiting to be discovered by scientists. As a rejection of positivistic science, social constructivists understand the world as a construct in constant evolution that can be understood through representations (Bruyat & Julien, 2001). This philosophical point of view values individuals’ unique experiences as a source whence they create their model of reality (Johnson-Laird, 1983). Constructivism argues that reality is socially constructed, and human interactions shape its meaning (Packard, 2017). According to Schwandt (1994), those who follow this particular scientific philosophy try to understand “the complex world of lived experience from the point of view of those who live it” (p. 118). This way to understand the meaning of action from the actor’s point of view is called Verstehen. According to constructivism, reality is thus emic and specific to a situation and context. This epistemological perspective is particularly suitable for this study for three main reasons. First, the central aspect of entrepreneurial ecosystem concept is interactions among diverse stakeholders who influence local entrepreneurial activities (Brown & Mason, 2017; Roundy et al., 2018; Spigel, 2017). In other words, entrepreneurial ecosystems can only emerge through human interactions, thus embodying social constructivism. This study seeks to understand entrepreneurial ecosystems not as a social entity, but as a social order that “emerges from intentional action and interaction” (Packard, 2017, p. 536). Understanding the meanings that human interactions create from the Verstehen and multiple realities of ecosystem stakeholders (Stake, 2010) is essential to understand the reality of the selected entrepreneurial ecosystem. Second, social constructivists seek to understand complex reality. Previous studies have highlighted the complexity of entrepreneurial ecosystems due to numerous influencing factors and their context-specific nature (Roundy et al., 2018; Spigel & Harrison, 2018). Following Roundy et al. (2018), ecosystem complexity is © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020 J. Harima, Public Accelerators in Entrepreneurial Ecosystems, https://doi.org/10.1007/978-3-658-31655-6_3

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determined by six characteristics (Section 2.1.4.3). By definition, the notion of complex systems opposes the idea of prediction and is highly specific to the respective context (Bygrave, 1993). Finally, related to the previous point, social constructivism emphasizes the evolution of phenomena. Scholars following this particular philosophical view understand reality as a fluid process and constant transformation and attempt “to embrace the complex and dynamic quality of the social world” (Leitch, Hill, & Harrison, 2010, p. 4). Social constructivism observes different levels of social order that are formed through the actions and intentions of individuals and prefer to investigate how and why such orders emerge and continue to evolve (Packard, 2017). Following this view, this study understands that an entrepreneurial ecosystem constantly evolves and consists of a multiple-level social order that emerges through individuals’ actions. 3.1.2 Qualitative Research Approach This study adopts an inductive qualitative research approach with a single case study. Qualitative studies are especially useful in investigating of new phenomena (Strauss & Corbin, 1990). This study is one of the first studies to investigate the role of public accelerators in the evolution of entrepreneurial ecosystems, and there is thus insufficient empirical evidence concerning and insufficient theoretical foundations for the observed phenomena of entrepreneurial ecosystems and how certain organizations, such as public accelerators, can provide resources and facilitate startups within the region. This prevents the development of concrete causal assumptions and calls for an explorative research design. The aim of this research is to capture the entire picture by identifying known and unknown dimensions. Another reason that a qualitative approach was selected is its emphasis on the holistic treatment of phenomena (Stake, 2010). While quantitative studies emphasize cause-and-effect explanations about the specific aspect of the phenomenon, qualitative studies value a holistic and contextual view to understand the phenomenon from multiple perspectives and on different analytical levels (Marschan-Piekkari & Welch, 2004). Such a holistic approach is essential to understand the complexity of ecosystem evolution by considering multiple dimensions. This study applies a qualitative approach to construct theories rather than to test existing theories (Golafshani, 2003; Hoepfl, 1997; Pervez, 2004). Due to the newness and complexity of the entrepreneurial ecosystem phenomenon, there is a severe scarcity of theoretical foundations for the research thereon. Therefore, this study aims to explore causalities regarding the early evolution of entrepreneurial ecosystems, which are still unknown to today’s scholars. On this point, it is worth introducing different types of theories: positivist theory and interpretive theory. Positivist theory places value on explanation and prediction and emphasizes generality and universality (Charmaz, 2014). It aims to verify theoretical relationships

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through hypothesis-testing. The type of theories that this study aims to build are, however, different from positivist ones; theories that are built in qualitative research have an interpretive nature. In contrast to positivist theories, the primary aim of interpretive theories is to understand meanings and actions and how people construct them. According to Charmaz (2014), “Interpretive theory calls for the imaginative understanding of the studied phenomenon. This type of theory assumes emergent, multiple realities; indeterminacy; facts and values as linked; truth as provisional; and social life as processual” (p. 231). This research seeks to develop interpretive theories by exploring new causalities. 3.1.3 Single Case Study This study conducts a single case study, with the public accelerator Start-Up Chile, which plays an integral role within the Santiago, Chile, entrepreneurial ecosystem. Case study research is “a research strategy which focuses on understanding the dynamics present within single settings” (Eisenhardt, 1989, p. 534). Conducting a case study allows this study to investigate the evolution of nascent entrepreneurial ecosystems in a context-specific manner. As Yin (2009) argued, a primary decision that scholars need to make in designing case studies is whether they select single- or multiple-case designs. Yin (2009) named several rationales for selecting a single case. Scholars select single case research when i) the case represents the critical case; ii) the case represents an extreme or unique case; iii) the case is the representative or typical case; iv) the case is the revelatory case; or v) the case allows investigators to conduct a longitudinal analysis. The rationale of this study to select the public accelerator Start-Up Chile and its surrounding entrepreneurial ecosystem as a single case is that this case is a critical, unique, and revelatory case. While there are numerous public accelerators in the world, Start-Up Chile was one of the pioneers, with more than 1,600 funded startups in its first 9 years (“Start-Up Chile,” n.d.). Start-Up Chile and its entrepreneurial ecosystem represent a unique case (Creswell, 1994; Stake, 2010; Yin, 2009), in which a public accelerator plays a critical role in the early ecosystem evolution since it officially aims to develop an entrepreneurial ecosystem, and the global startup community recognizes its significant role in the ecosystem development of the Santiago entrepreneurial ecosystem (Genome, 2017). This setting offers an ideal empirical setting for this study to investigate the role of public accelerators in a nascent entrepreneurial ecosystem. Given that there are no other examples but Start-Up Chile, one can say that it is a revelatory case, a term used to

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denote the observation and analysis of a phenomenon about which investigators could previously not conduct social science inquiries. 3.2 Empirical Data 3.2.1 The Case: Start-Up Chile & the Santiago Entrepreneurial Ecosystem Start-Up Chile is a public accelerator begun by a Chilean governmental organization, Corporación de Fomento de la Producción (CORFO)3 to create a thriving entrepreneurial ecosystem in Santiago de Chile (Gonzalez-Uribe & Leatherbee, 2018). It lures foreign entrepreneurs to the entrepreneurial ecosystem by offering them equity-free seed investment and a coworking space with a dynamic entrepreneurial community. In return, program participants must be actively involved in the entrepreneurial ecosystem, for instance, by spreading the word, teaching local students startup methodology, or organizing inspiring events. The Santiago entrepreneurial ecosystem has rapidly grown, as Start-Up Chile has brought to itself a large number of entrepreneurs, who inspired local people through their ecosystem engagement and stimulated overall entrepreneurial activities within the region (Genome, 2017). Ten years ago, Santiago de Chile was not a hub of startup activities, and there were limited vibrant and visible dynamics of the development of an entrepreneurial ecosystem. The Santiago ecosystem, however, grew rapidly after Start-Up Chile was established. Today, local universities offer programs and courses in entrepreneurship to foster future founders and business incubators to nurture students’ startup activities. A growing number of coworking spaces have provided office space for aspiring entrepreneurs. The case of Start-Up Chile offers a unique empirical setting to investigate the role of a public accelerator that has significantly influenced the evolution of a nascent entrepreneurial ecosystem. The entrepreneurial ecosystem and Start-Up Chile are introduced in detail in Chapter 4. 3.2.2 Selection of Interviewees The primary source of empirical data for this study is qualitative interviews. All the interviews were conducted in English. The list of interviewees is provided in Table 13. This study purposively selected interviewees with different backgrounds, including accelerator managers, international and local startup founders (with and without a link to Start-Up Chile), investors, and policy representatives. As suggested in the literature, an entrepreneurial ecosystem consists of a diverse

3

CORFO refers to Production Development Corporation. CORFO was founded in 1939 and aims to spur the economic development of Chile.

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91

set of actors, and its evolution can only emerge through human interactions (Brown & Mason, 2017; Roundy et al., 2018; Spigel & Harrison, 2018). Therefore, it is essential to gain the perspectives of different ecosystem actors to ascertain multiple realities (Stake, 2010). Table 13: List of Interviewees

ID

Ty pe *

Gender

Home Country

FE-1

FE

Male

India

Female

Romania

Female

Columbia

Female

US

Female

UK

Female

Peru

Female

Brazil

Female

Columbia

Female

Brazil

Male

US

Male

Venezuela

Male

South Africa

FE-2 FE-3 FE-4 FE-5 FE-6 FE-7 FE-8 FE-9

FE FE FE FE FE FE FE FE

FE10 FE11 FE12 FE13 FE14

FE

CE-1

CE Male

Chile

CE-2

CE Male

Chile

CE-3

CE Male

Chile

CE-4

CE Male

Chile

FE FE FE FE

Female

US

Male

New Zealand

DuraInterRole in the Business & Com- tion (in view Santiago ments min.) Mode* Ecosystem * Start-Up Chile Robot manufactur- 40 F2F alumnus ing Start-Up Chile 80 Skype Cooking app alumnus Start-Up Chile 80 F2F Healthy snack participant Start-Up Chile Market analysis 40 F2F participant software Start-Up Chile 37 F2F Online education participant Start-Up Chile 37 F2F Food/health participant Start-Up Chile Nano-credit in 37 F2F participant LATAM Start-Up Chile Sales platform for 32 F2F participant startups Start-Up Chile Travel/flights plat- 67 F2F participant form Start-Up Chile 131 F2F Mentor platform participant Start-Up Chile 41 F2F Educational toy participant Start-Up Chile 36 F2F Game technology participant Start-Up Chile Podcast/media plat- 59 Skype participant form Fundacion 98 F2F App for school bus Chile startup Start-Up Chile 55 F2F Legal app participant Start-Up Chile 56 F2F Fin-tech participant Researcher and Lec- 95 F2F Start-Up Chile turer on startup fialumnus nancing Startup Week54 F2F end organizer

92

3 Methodology Start-Up Chile director Start-Up Chile director Start-Up Chile intern Start-Up Chile manager Start-Up Chile founder Former StartUp Chile employee Former StartUp Chile employee Wayra Chile executive INNOVO Incubator

EE-1

EE

Female

Chile

EE-2

EE

Female

Chile

EE-3

EE

Female

Germany

EE-4

EE

Male

Mexico

EE-5

EE

Male

Chile

EE-6

EE

Male

Chile

EE-7

EE

Male

New Zealand

EE-8

EE

Male

Chile

EE-9

EE

Female

Chile

Male

Chile

Male

Chile

Male

Chile

Male

Chile

CORFO

Male

Chile

CORFO

Female

Chile

V C V VC-2 C V VC-3 C G GV-1 V G GV-2 V UNI- U 1 N VC-1

UNI2

U N

Male

Chile

70

F2F

70

F2F

25

F2F

71

F2F

54

EX

Governmental ac- 48 celerator in LATAM Founder of cowork- 58 ing spaces in Santiago 93

F2F

91

F2F

89

F2F

102

F2F

109

Skype

45

F2F

45

F2F

68

F2F

73

F2F

Magma VC Fundacion Chile Manager Chile Ventures

Universidad Adolfo Ibáñez Pontificia Universidad Católica de Chile

Research on GEM Research on StartUp Chile and CORFO

F2F F2F

Researcher and con- 75 Skype ex- sultant on entrepreneurial ecosystems development * FE= Foreign Entrepreneurs; CE= Chilean Entrepreneurs; EE=Ecosystem Actors (e.g., accelerators, incubators); VC=Venture Capital; GV=Governmental Representatives; UNI= University Researchers; EEX=External Expert || ** F2F= Face to face; external interview EEX- EE 1 X

Male

Argentina

External pert

The interviews with FE-1, FE-2, FE-3, FE-4, FE-5, FE-6, FE-7, FE-8, FE-9, FE10, FE-11, FE-12, and FE-13 were conducted to explore the experience of foreign entrepreneurs who participated in different acceleration programs in Start-Up Chile. When identifying potential interview participants, the author paid particular

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attention to three dimensions to consider the diversity of foreign entrepreneurs at Start-Up Chile: (i) home country, (ii) type of acceleration programs, and (iii) time of participation. The author also conducted interviews with Chilean entrepreneurs who attended acceleration programs of Start-Up Chile (CE-1, CE-2, CE-3) to understand the experience of Chilean participants with Start-Up Chile and with the local ecosystem and how they perceived foreign entrepreneurs during the program. Apart from both foreign and Chilean entrepreneurs, this study also conducted interviews with the current management team of Start-Up Chile (EE-1, EE-2, EE-3, EE-4) and its previous employees (EE-6, EE-7) and considered one independent secondary interview data (Podcast) with the founder of Start-Up Chile (EE-5). In this interview, the founder of Start-Up Chile explained his motivation to begin this program, how he did so together with CORFO, and the initial development of the program. This study also conducted interviews with other ecosystem stakeholders. Interviews with VC-1, VC-2, and VC-3 aim to understand the perspective of investors. More specifically, the author asked local investors how they evaluate the recent development of financial providers in the Santiago entrepreneurial ecosystem and how they as investors see the potential of startups in Santiago and how they see the ecosystem. Interviews with GV-1 and GV-2 were essential for this study to grasp the political intensions that motivated CORFO to initiate and operate StartUp Chile. To gain insight into and perspectives on the ecosystem actors not directly related to Start-Up Chile, the author conducted interviews with FE-14 (a foreign entrepreneur participating in a private accelerator), CE-4 (a Chilean organizer of Startup Weekend), EE-8 (a director of a corporate accelerator), and EE-9 (a manager of a local university incubator). Additionally, the author conducted two different types of expert interviews. In the summer of 2017, the author conducted two off-the-record conversations with Uni1 and Uni-2, both of whom were involved in research on entrepreneurial ecosystems at prominent universities in Santiago de Chile. They provided this study with an overview of the previous development and the current situation of the Santiago entrepreneurial ecosystem. In the summer of 2019, the author conducted one further interview with an expert on ecosystems in Latin America to contrast the empirical findings of this study with the understanding of experts and to gain critical feedback on emerging causalities.

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3.2.3 Data Collection As suggested by Eisenhardt (1989), case studies typically combine different data collection methods. This study considers multiple data sources and both primary and secondary data. The process of data collection is visualized in Figure 14. As the major source for primary data, this study relies on 35 interviews with different functions. The interviews with GV-1 and GV-2 took place in 2015 and were conducted by a fellow researcher from the same working group as the author, at the University of Bremen. These interviews focused on gaining the first insights into Start-Up Chile and its influence on the Santiago entrepreneurial ecosystem. This study considers these interviews to develop a contextual understanding of the better preparation of the primary data collection phase. In the summer of 2017, the author conducted 30, mainly face-to-face, semi-structured interviews in Santiago de Chile. The author conducted some of these interviews with one additional researcher from the same working group at the University of Bremen. The interview guidelines consisted of three parts. The first part contained questions regarding the personal and entrepreneurial backgrounds of the interviewee. The second part addressed the interviewee’s experience or perceptions of Start-Up Chile. Finally, the third part contained questions about how the interviewee observes the evolution of the Santiago entrepreneurial ecosystem and the role of Start-Up Chile in this context. The nature of this type of interview with pre-formulated guiding questions allows for flexible adjustments on behalf of what the interviewee emphasizes during the conversation (Atteslander, 2010). The face-to-face interview helps to capture additional information on the interviewee by observing their behavior during the conversation. This is supported by the conversational and informal tone of semistructured interviews, which helps the interviewee to relax in order to openly share their stories (Longhurst, 2003). The interview with EEX-1 took place in the summer of 2019 and is different from other interviews. EEX-1 is an expert in the research objective of this study, and the author conducted these interviews for the sake of triangulation (Flick, 2004). EEX-1 is an Argentinian consultant and senior researcher who has been conducting various studies on entrepreneurial ecosystems in Latin America. He also developed an index for Latin American entrepreneurial ecosystems. Therefore, EEX-1 can provide a meta-perspective on the recent development of the Santiago entrepreneurial ecosystem. In the interview, the author discussed the emerging causalities and models developed based on the dataset collected in 2017 to contrast with the experience and perceptions of EEX-1. The relationship and trust between interviewer and interviewee significantly influence the quality of interviews (Leitch et al., 2010; Petkov & Kaoullas, 2016), and the author thus worked to build trust with interviewees. Most interview partners were either approached in person or contacted through someone whom the

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investigator had previously talked to in person, thereby building trust before the interview even began. In some cases, the author made the first contact via LinkedIn. Approaching interviewees via social media was necessary to get in touch with actors who were not directly linked to Start-Up Chile. In these cases, it was important for an initial conversation to establish a relationship with the interviewee before the recorded interview started. The author’s own background as an entrepreneur was also helpful in building common ground with the interviewees. Each interview was recorded, with the permission of the interviewee, and later transcribed. In addition to the recorded interviews, observation memos were written for each conversation. Observation memos are helpful in qualitative research to interpret the interviewee’s verbal expressions and actions (Golafshani, 2003). It is in this way easier to understand the development of ideas in the course of the study, and systematic comparisons across subjects and outcomes become more feasible (Goulding, 1999). The interview memos included the researcher’s perception of the subjects’ non-verbal communication, such as gestures, facial expressions, and emotions expressed by tone and body language. The memos offered contextual information during the data analysis process, allowing this study to consider non-verbal information explicitly. Furthermore, the author conducted extensive observation during his stay in Santiago in the summer of 2017. During the field study, the author regularly visited the coworking places of Start-Up Chile and attended Start-Up Chile workshops in order to observe interactions and dynamics among participants. He also participated in the orientation day of a new batch of an acceleration program – an opening event for those who have newly arrived at Start-Up Chile – to better understand the “onboarding” of new entrepreneurs and the efforts of Start-Up Chile to build an integrative community from the start. Furthermore, the author joined other formal and informal non-work-related activities and events around the Start-Up Chile community to observe interactions among entrepreneurs in diverse settings. Additionally, extensive internet research was conducted to provide a better contextual understanding and add information to a more comprehensive overview of the case. Apart from the website of Start-Up Chile and its press releases, several news articles and reports about Start-Up Chile and the entrepreneurial ecosystem were studied. Furthermore, blogs from participants were considered as an additional data source.

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Pre-Data Collection

A fellow researcher from LEMEX conducted interviews with GV-1 and GV-2 to gain the first insights into the Santiago entrepreneurial ecosystem

2017

Main Data Collection

The author conducted 30 interviews in Santiago de Chile or via Skype with FE-1, FE-2, FE-3, FE-4, FE-5, FE-6, FE-7, FE-8, FE-9, FE-10, FE-11, FE12, FE-13, FE-14, CE-1, CE-2, CE-3, CE-4, EE-1, EE-2, EE-3, EE-4, EE-5, EE-6, EE-7, EE-8, EE-9, VC-1, VC-2, VC-3. In addition to formal interviews, the author conducted two further informal interviews with UNI1 and UNI-2 without recording. Some of the interviews were conducted together with one additional researcher from LEMEX.

2019

Ex post Expert Interview

The author conducted an interview with an external expert (EEX-1) in August 2019 to triangulate the findings of this study.

2015

Figure 14: Data Collection Process

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3.3 Data Analysis This study uses data analysis methods from the grounded theory approach (Charmaz, 2008; Maher et al., 2018) while acknowledging the value of initial consultation with extant literature to support the discovery of new insights (Gioia et al., 2013). More specifically, this study employed multiple coding steps to interpret and construct empirical data. Coding refers to the “ongoing process of assigning conceptual labels to different segments of data in order to identify themes, patterns, processes, and relationships” (Hodkinson, 2008, p. 103). Before beginning the data analysis process, the author systematically organized all the data, including transcribed interviews, observation memos, and secondary data, and inserted the data into a qualitative data analysis software called MAXQDA. This was essential to deal with such a large amount of diverse empirical data. In the first step of data analysis, the author paraphrased statements from the interviewees to gain familiarity with the data and prepare it for the category building process (examples in Figure 15). This step was particularly important to develop a better understanding and reduce complexity (Maher et al., 2018). The coding method applied in this stage was close to the line-by-line coding suggested by Charmaz (2014), but this study did not strictly adhere the principle of coding each sentence, with unit of coding being a sentence. Instead, the author coded all the statements of interviewees that include information that is, either directly or indirectly, relevant to the inquiry of this study. At this stage, the author did not have any theoretical construct in mind and tried to code the statement as close to empirically raw as possible, without interpreting it as an investigator. As a result, 2,271 open codes emerged from empirical materials. The second step of data analysis was to consolidate the initial codes by comparing them and findings patterns. In this process, the author began to step away from raw empirical data and to applying analytical lenses and the understanding gained through the literature review in the fields of entrepreneurial ecosystems and accelerators. This theoretical sensitivity (Glaser, 1978) was critical to construct categories and identify patterns, as a preparation to build theoretical dimensions. At this stage, the author undertook selective coding, reducing the number of codes from 2,271 to 115. This study defines the codes produced in the second step as the firstorder categories. The third step of data analysis is theoretical coding, which “simply means applying a variety of analytic schemes to the data to enhance their abstraction” (Stern, 1980, p. 23). This is a highly iterative and abductive process in which the author intensively compared emerging categories and literature. The literature considered in this process is not limited to entrepreneurial ecosystem and accelerator literature. According to the observed reality and insights, the author tried to consult existing

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literature in different research fields that might illuminate emerging causalities or aid in the development of explanations. Charmaz (2014) refers to this process as follows: “Abductive inference entails considering all plausible theoretical explanations for the surprising data, forming hypotheses for each possible explanation, and checking these hypotheses empirically by examining data to arrive at the most plausible explanation” (p. 201). The third step produces 42 second-order categories, grouped into 18 aggregated dimensions.

Raw Interview Data

Paraphrased Coding

I think...how to put it...like for me in this place is kind of origin point because like for example in this book 'How To Make Friends'. There's something called blue dots, right? Blue dots, black dots and people like whom we meet. For me if we compare that it's like a blue dot which made me connect with a lot of people.

“Start-Up Chile is origin point in network”

So, I'm literally I mean not like I'm just buddies with like I'm actually being called upon to help address specific questions to help advance specific issues to help analyze specific problems or opportunities for at least...I mean regularly like once a week least fifteen...

“often got asked from others for help with specific problems”

“the co-working space is very very open. I am preparing myself I don't know like a cup of tea and some was like preparing themselves coffee and we salute each other, they are super nice, they are like 'Oh! You have to go to my house, I am gonna have a party, you're invited'. So, it's nice. It's a very friendly environment.”

“Meeting others in the kitchen of cowork, invite each other to parties”

Figure 15: Examples of Open Coding

The above-mentioned multiple iterative coding processes identified 18 aggregated dimensions, belonging to five distinct stages of the evolution of a nascent entrepreneurial ecosystem: (i) acquiring resources from outside the ecosystem, (ii) integrating and accumulating acquired resources within the accelerator, (iii) developing entrepreneurial ecosystem resources, (iv) coordinating the ecosystem resource flow, and (v) facilitating entrepreneurial ecosystem resource recycling.

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3.4 Ensuring Methodological Rigor This section critically argues how this research made efforts to ensure the rigor of this qualitative study. An overview is presented in Table 14. When discussing validity and reliability in the context of qualitative studies, scholars should be aware that these concepts should be understood based on the philosophical foundation of qualitative research. As discussed in Section 3.1.1, the qualitative paradigm embodies social constructivism, which assumes that reality is socially constructed and that its meaning emerges only through individuals’ interpretation. Therefore, constructivism values pluralistic, interpretive, open-ended, and contextualized perspectives of reality and thus focuses on different standards, such as trustworthiness and authenticity, to determine validity and reliability compared to quantitative approaches (Creswell & Miller, 2000). Three types of criteria are used to judge the quality of the research design, namely, internal validity, external validity, and reliability, and the following paragraphs explain the efforts that this study made to fulfill each criterion. The first type of criteria is internal validity. To ensure internal validity, this study conducted two types of triangulation (Baxter & Jack, 2008; Creswell & Miller, 2000) and member checking (Caretta, 2016; Lincoln & Guba, 1985). Triangulation enhances the internal validity from the investigator’s lens, while member checking does so from the participants’ lens. Table 14: Overview Methodological Rigor

Internal Validity Data triangulation Investigator tion

triangula-

Member checking

External Validity “Thick description” of concepts and categories in emerging theory “Thick description” of structures and processes related to causalities revealed in data

Reliability Purposeful and theoretical sampling Interviewees’ confidentiality protected Transparent data analysis process

This study conducted data and investigator triangulation (Johnson, 1997). The concept of triangulation refers to “a validity procedure where researchers search for convergence among multiple and different sources of information to form themes or categories in a study” (Creswell & Miller, 2000, p. 126). Triangulation helps to counteract threats to the validity of the research design, such as personal biases or one-sided data sources (Brink, 1993). By combining different methods

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and data, the researcher reduces the chances of misunderstandings and strengthens the quality of a study (Patton, 1990). First, this study used multiple sources of evidence, including interviews with different types of actors within the Santiago entrepreneurial ecosystem, observation in different empirical settings, and various secondary data sources. The consideration of different types of data sources allows this study to consider multiple realities of the evolution of a nascent entrepreneurial ecosystem and the role of StartUp Chile in this context. Second, the author conducted investigator triangulation with a senior researcher in the same working group, at the University of Bremen, who collected initial interviews in 2015 and partly joined the data collection for this study in 2017. This senior researcher is familiar with the empirical context and the content of the interviews, and the author conducted several conversations with this colleague in multiple stages of the data analysis process to discuss the author’s interpretation and data construction. At several points, the author’s and the senior researcher’s opinions diverged, providing this study with opportunities to critically reflect and improve the data analysis. As for member checking, the author conducted an interview via Skype with an external expert (EEX-1) in the summer of 2019 to present a set of emerging causalities and to receive critical feedback. The second type of criteria is external validity, referring to the transferability of the research (Lincoln & Guba, 1985). Following the techniques suggested by Shah and Corley (2006), this study applied so-called thick description of (i) concepts and categories in the emerging theory and (ii) structures and processes related to influencing factors and causalities revealed in the data. According to Stake (2010), thick description refers to the “theory-based description emphasizing the experience of those studied” (p. 221). In this study, the data structure corresponds with the structure of Chapter 5 in which the author demonstrates empirical evidence based on quotes from various stakeholders and the author’s observation memos to present the perspective of participants in support of the emerging causality of each second-order category of theoretical dimensions. The final criterion that this study considered is reliability, determined by three factors: (i) purposive and theoretical sampling, (ii) protection of participant confidentiality, and (iii) an inquiry audit of the data collection, management, and analysis process. First, Section 3.2.2 explained the purposive sampling of this study by explaining the logic behind data selection. To capture multiple realities of the role of Start-Up Chile in the early evolution of the Santiago entrepreneurial ecosystem, this study intentionally conducted interviews with several different types of ecosystem actors and with stakeholders of Start-Up Chile. Second, this study anonymized all the interview partners to protect their confidentiality. Furthermore, the author made sure to communicate with each interviewee the aim of this study and the usage of empirical data prior to interviews. Finally, this author took various

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measures to make the data analysis process of this study as transparent as possible. To this end, the author first documented and saved all the data – both primary and secondary – in a systematic manner to create an overview of the data available to this study. Second, all the data was imported into MAXQDA so that anyone could immediately trace how the initial coding was performed. Third, as seen in the example of Figure 16, the data structure suggested by Gioia et al. (2013) was applied, which is helpful in showing how theoretical dimensions were constructed in this study. Finally, this study used Microsoft Excel to sort all the initial codes into either the second or first categories. First-Order Categories • • • • •

Social media connections before the program starts Introductory week with social events Events to get to know startups of peers Let everyone share problems and challenges Close interaction creates feeling of being family

Second-Order Categories

Aggregated Dimensions

Creation of shared values and a common identity

Section 5.3.1

• Mix participants in activities during introductory week • Reinforce connections during the whole program • Facilitate private group activities of participants

Intra-program connections

Accelerator community building

• Create venues for participants to meet alumni • Small events with participants of all programs • Buddy program to help new participants integrate

Inter-program connections

Figure 16: Example of Data Structure for One Aggregated Dimension

4 Research Setting Chapter 4 provides the reader with information and context about the research setting. Section 4.1 presents an overview of the current situation and the recent development of the Santiago entrepreneurial ecosystem, followed by Section 4.2, which introduces the history, strategic objectives, and acceleration programs of the public accelerator Start-Up Chile. 4.1 The Santiago Entrepreneurial Ecosystem Santiago is the capital city of Chile, which is located on the south-western edge of the South American continent. This country’s unusually long and thin shape and its location between the Andes and the Pacific places it in a geographically isolated position on the continent. Chile has a population of about 17.5 million, of which 40.5% live in the metropolitan area of Santiago (Memoria del Censo 2017, 2018). Chile has been South America’s fastest-growing and most stable economy in recent decades (Buc, 2006), and it is considered to be the most advanced country in South America, which is also visible in its position in the Human Development Index, in which it was ranked 38th in 2016 (Jahan & Jespersen, 2016). The political stability makes Chile one of the least corrupt countries in the world, ranking 26th in the “Corruption Perception Index” (Corruption Perceptions Index, 2018), and creates a favorable institutional environment. While the stable institutional environment positively impacts the overall pleasant business climate, the downside of Chile’s economy is its significant dependency on the primary sector, such as mining, with almost half its exports being raw materials. Another 41% is intermediate goods, and only 11% of exports are consumer goods (“Worldbank Country Snapshot Chile,” 2017). These numbers indicate that Chile’s economy has not been innovation-driven. As the uncontested economic center of Chile, Santiago hosts all the leading universities and most of the country’s largest corporations. Its stable economic growth over the past decades has transformed Santiago into a vibrant modern city with a high quality of life and comparatively low living costs, which may have contributed to the creation of favorable conditions for the emergence of an ecosystem. In recent decades, Chile has successfully transformed its economy, as apparent in its continuous economic growth, at an average annual rate of 7.2% from the mid1980s to 1997 and at 3.5% between 1998 and 2005 (Buc, 2006). During its economic transformation, the country learned the value of entrepreneurial activities, and policymakers have made substantial efforts to support entrepreneurs. Entrepreneurial support has long been a national-level concern of Chilean policymakers, with then-president Ricardo Lagos developing the National Strategy of © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020 J. Harima, Public Accelerators in Entrepreneurial Ecosystems, https://doi.org/10.1007/978-3-658-31655-6_4

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Innovation for Competitiveness. Chile’s strategic focus on entrepreneurship has been publicly communicated, as represented in the first speech of then-president Michelle Bachelet in 2006, who described Chile as “a country of entrepreneurs.” An example of Chilean policy instruments for entrepreneurs is the government’s investment in business incubators to promote entrepreneurship, which, since the early 1990s, has been remarkable. Chandra and Narczewska (2009) reported that 21 out of around 25 business incubators operating at the time were financed through CORFO, the government agency whose primary aims are supporting small business and entrepreneurship in Chile. Their support to business incubators was implemented within the Seed Capital Program (Capital Semilla in Spanish), which CORFO created in 2001 with the objective of providing assistance to entrepreneurs with innovative ideas. In this program, individual entrepreneurs had to have an intermediary organization, such as a business incubator, associated with CORFO as a beneficiary (Cancino, Núñez, & Merigó, 2019; Chandra & Narczewska, 2009; Navarro, 2018). Another prominent policy instrument is Fundación Chile, which seeks to attract foreign direct investment in information technology. Fundación Chile was founded in 1975 and has focused on six mostly natural-resource intensive sectors: (i) agribusiness, (ii) marine resources, (iii) forestry, (iv) environmental and chemical metrology, (v) human capital, and (vi) information and communication technologies (Agosin, Grau, & Larrain, 2010). Apart from such governmental initiatives, some private entrepreneurial support has also emerged, such as the Endeavor Project, which has contributed to the familiarization of the role of high-impact entrepreneurship after its establishment in 1998. Such extensive policy instruments for entrepreneurial activities have successfully supported Chilean entrepreneurs. The Global Entrepreneurship Monitor reported that Chile has one of the highest total early-stage entrepreneurial activity rates among adults in Latin America, with almost 25% in 2017 and 2018 (Bosma & Kelley, 2018). Despite entrepreneurship-friendly policies and the high level of entrepreneurial activities, participants in this study tended to agree that a decade ago, there was limited momentum in the evolutionary dynamics of the Santiago entrepreneurial ecosystem. One possible explanation is the under-developed linkages among ecosystem stakeholders. Scholars have pointed out the lack of interconnectedness and social capital for collaborative innovation in Chile (Bas & Kunc, 2009; Klerkx, Álvarez, & Campusano, 2015). Klerkx et al. (2015) named the fragmented nature of public support and the reluctance for industry-academia collaborations as reasons for the under-developed social capital in Chile. Other scholars also recognized insufficient interactions between universities and entrepreneurial ecosystems (Bernasconi, 2005; Poblete & Amorós, 2013). While financial capital is generally acknowledged as one of the most decisive factors for high-growth oriented

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entrepreneurship, several studies reported evidence to show the limited size of equity funding in Chile and the lack of social capital among equity investors (Agosin et al., 2010; Amorós, Atienza, & Romaní, 2008; Romaní, Atienza, & Amorós, 2013). Apart from the lack of interaction among ecosystem actors, the institutional settings of Chile may help explain the somewhat sluggish evolution of the Santiago ecosystem until around 2010. Chile is a resource-based economy, which heavily relies on the exploitation of natural resources, such as mining (Bas, Amoros, & Kunc, 2008). While natural resources have created the country’s wealth, such a strong reliance on the primary sector is labeled as the “Dutch disease” (Amorós, Basco, & Romaní, 2016), referring to the advancement of the natural resources sector causing a decline in other sectors, for instance, knowledge-intensive industries. Furthermore, Romaní, Atienza, Campos, Bahamondes, & Hernández (2018) demonstrated a critical aspect of the Chilean mining industry, namely, that the wealth created by mining has not been re-invested in entrepreneurial business. Another institutional factor that might hamper the emergence of ecosystem vibrancy is Chilean culture. Chilean culture is characterized by a substantial degree of hierarchical structure and bureaucracy, which causes high administrative burdens to (nascent) entrepreneurs (Schwellnus, 2010). Furthermore, Chile is an aristocratic society, with a few privileged families dominating the economy. This societal disparity between the haves and have-nots makes it difficult for the poor to turn exercise significant control over their vocational path and for the rich to step out of their comfort zone. Sepúlveda and Bonilla (2014) pointed out that Chileans are risk-averse, fearing failure more than other Latin American countries. In addition, Chilean tends to “admire and greatly value anything that is foreign, particularly what comes from the Anglo-Saxon world, where they look for models of behaviors that (can) be imitated or may substitute or become their own projects” (Gómez, 2001, p. 126). This may be attributed to its geographical isolation and the location, between the Andes and the Pacific and near Antarctica. Its disconnectedness to the rest of the world has created a sense of inferiority to foreign countries and an inward-oriented, conservative mindset among Chileans, and this might result in the lack of a global mindset and aspiration for internationalization. In 2017, the Santiago entrepreneurial ecosystem generated 500–700 tech startups and accounted for approximately 90% of Chile’s startup activities (Genome, 2017). Within a decade, Santiago became a leading South American entrepreneurial ecosystem and is often referred to as “Chilecon Valley.” The “Global Startup Ecosystem Ranking Report 2017” summarized the situation of the Santiago entrepreneurial ecosystem as follows: “The government’s open-arms approach to foreign entrepreneurs as well as different government-backed entrepreneurship programs have led to a

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robust and growing local startup scene. Chile’s government-backed entrepreneurship programs have supported close to 200,000 of its entrepreneurs, along with foreign entrepreneurs from around the world” (Genome, 2017, p. 93). In the same report, Tadashi Takaoka Caqueo, former director of CORFO, described how “Santiago’s ecosystem has grown at high speed for the last ten years, becoming one of the strongest and most diverse ones in Latin America and the world. With more than 1,000 startups supported by the government per year, it is also one of the most dynamic (ecosystems) in the seed stage” (Genome, 2017, p. 93). Chile also has tax-friendly policies, such as worldwide double taxation avoidance agreements, that greatly benefit foreign entrepreneurs. According to the Global Entrepreneurship Index, in 2018, Chile was the best country in Latin America in which to start a business and the 19th best in the world. The strengths of the Santiago entrepreneurial ecosystem are its attraction of global resources, a government that is actively involved with innovative startup policies, the high number of former startup employees with an engineering background, and the comparatively low salaries of potential startup employees. In a report from 2019 on leveraging entrepreneurial ambition and innovation, the Global Entrepreneurship Monitor named Chile the country with the highest levels of innovation among entrepreneurs worldwide, with almost 50% of its entrepreneurs introducing products or services that were new to customers and had not yet been offered by other competitors (Bosma & Kelley, 2018). Most of these strengths of the Santiago entrepreneurial ecosystem were actively developed and are still driven mainly by the well-known public accelerator StartUp Chile, which was initiated by the government in 2010 with the clear aim of developing the entrepreneurial ecosystem and changing the mindset of Chileans towards encouraging innovation and startup activity. It infused the nascent and fragile entrepreneurial ecosystem with entrepreneurial resources, such as hundreds of experienced and passionate entrepreneurs from around the world. 4.2 The Public Accelerator Start-Up Chile This study conducted a single case study in the Santiago entrepreneurial ecosystem with the public accelerator Start-Up Chile as a central player. Therefore, it is essential to provide extensive background information on how it was established, how the accelerator advanced its structure and strategy in recent years, and its characteristics during the time of this research. Section 4.2.1 presents the emergence and evolution of Start-Up Chile to understand its background, whereafter Section 4.2.2 surveys the different acceleration programs of this public accelerator. Section 4.2.3 then demonstrates the impact of Start-Up Chile on program participants and on the local ecosystem.

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4.2.1 Emergence and Evolution of Start-Up Chile Several factors contributed to the creation of Start-Up Chile. Following the global financial crisis of 2008, Chile’s GDP growth rate dropped from 4.2% in 2007 to 1.7% in 2009 (“Worldbank GDP growth Chile,” 2018), and in response, CORFO began to look for new ways to stimulate the local economy, which had always been highly dependent on raw materials and not considered to be innovative. One of the experts they asked for advice was Vivek Wadhwa, a successful tech entrepreneur and researcher from Silicon Valley who described his observation at that time as follows: “Chile not only has a small population; its entrepreneurial ecosystem has the same disadvantages as most regions of the world: failure is vilified, secrecy is highly valued, and mentoring and social networks are lacking. Then there is Chile’s remote location—its southern end borders the South Pole, and entrepreneurs there are not only disconnected from one another but from the rest of the world” (Wadhwa, 2012, p. 26). He suggested that Chile should take advantage of the restrictive immigration policies of the US, which prevented many successful entrepreneurs worldwide from starting their business there. Chile could attract these innovators, who have entrepreneurial mindsets and talent, by offering visas and financial incentives. In early 2010, a devastating earthquake paralyzed Chile’s economy, and as a result, many Chileans from abroad turned back to their home country to help it recover from the crisis. One of these was Nicolas Shea, a Chilean entrepreneur who founded a successful business in Silicon Valley and had just finished his master’s degree at Stanford University. He approached the newly elected, business-friendly Chilean president, Sebastián Piñera, who thought similarly to Vivek Wadhwa, and proposed that Chile should “pay” foreign entrepreneurs to come to the Santiago entrepreneurial ecosystem to launch their startups, bringing expertise, new ideas, and access to worldwide business networks. The new government was open to these innovative and unconventional ideas and decided to fund a six-month pilot program in the second half of 2010. Of 100 applications, 23 were invited to come to Chile to attend the acceleration program and received 40,000 USD and a oneyear working visa (Melo, 2012). The pilot proved to be a success, both in terms of growing startups and in creating links with the local business community, and the government decided to institutionalize this process and fund Start-Up Chile. For the first official round, StartUp Chile received 320 applications from more than 30 countries, of which 84 were admitted into the program (Melo, 2012). Giving equity-free money without being strictly regulated was uncommon at the time, and Start-Up Chile received media attention worldwide. The second round received 650 applications from more than

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70 countries, of which 154 were accepted. At this time, Start-Up Chile was not considered to be an accelerator, and its main objective was to bring in talented entrepreneurs to Chile to help make Santiago a vibrant entrepreneurial ecosystem. After the core program of Start-Up Chile was successfully implemented, the management team began to expand the program, offering weekly workshops on different topics related to startup entrepreneurial activities, such as entrepreneurial marketing or pitch training in their coworking place. These educational components of the program aimed to ensure that participants became familiar with the many tools needed to develop their business, and they also served to foster a collaborative environment that promoted peer-to-peer interaction among program participants (Melo, 2012). Initially, Start-Up Chile had a system called “Padrino,” with which it matched the participants with locals to help them accommodate in a new environment. Later, this system was extended to be a mentoring program that connects program participants and mentors from Chile and abroad. The year 2014 was a turning point for Start-Up Chile due to the drastic change in the country’s political environment from the government change. The new government continued to support the program but initiated changes to its overall structure and objectives. While Start-Up Chile had been open to Chileans since shortly after its inception, the new government wanted to increase the number of Chilean participants. This strategic shift resulted in more content being produced in Spanish. One important monthly event that connects Start-Up Chile to local corporations, “Tech Evening,” is held completely in Spanish. Responding to this change in political environment, two more programs were established under the Start-Up Chile brand. First, to forward the government’s agenda of strengthening its support for female entrepreneurship, a four-month preacceleration program, The S-Factory (TSF), was initiated. The program was open exclusively to startups led by female entrepreneurs and offering equity-free seed funding of 15,000 USD. The premise of the program was to build confidence and provide a supportive environment for female founders who are still at the idea stage with no customer engagement yet. Second, a one-year growth program called the Scale Program was implemented, offering 90,000 USD to entrepreneurs incorporated in Chile who wanted to scale their business from the Santiago entrepreneurial ecosystem to South America and eventually worldwide (in 2018 the Scale Program was partly restructured and is now called Huella). Both new programs were substantially smaller and used the same resources as the initial program, which was labeled the Seed Program. While the workshops were almost the same, TSF founders did not get access to the mentor network and were instead mentored by founders from the other two programs.

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4.2.2 Start-Up Chile’s Acceleration Program As mentioned in the previous section, Start-Up Chile offered three different acceleration programs at the time of data collection. Figure 17 presents an overview of these programs. This section provides an overview of the two main programs offered at Start-Up Chile: TSF and the Seed Program. The S-Factory, Start-Up Chile’s acceleration program for female entrepreneurs supported around 40 female-led startups in 2018. As of December 2018, the most recent generation had begun on August 2018, with 20 projects from nine countries, of which 50% were Chilean, all of which were selected from 185 applications (“Welcome New Generation TSF8,” 2018). Most of the startups in TSF have neither a concrete business idea nor experience as founders when they join the program. During the program, participants receive educational courses from the accelerator management on the Lean Startup methodology, which is based on the book “Running Lean” written by Maurya (2012). While most of the participants are not familiar with useful entrepreneurial concepts and tools, a few entrepreneurs who attend this program do come with experience. These people with experience are helpful for other participants with less experience and proactively provide guidance based on their knowledge. This study observed that some TSF participants provided workshops on certain topics, such as marketing and sales, to their fellow participants in informal settings. The author also observed that the Chilean TSF participants frequently struggled with English and therefore had trouble integrating themselves into the community of foreign fellow founders. Start-Up Chile

The S-Factory

Seed

Scale

4 months

6 months

12 months

~15.000 USD

~30.000 USD

~90.000 USD

Targets woman entrepreneurs with an idea

Targets entrepreneurs with first sales

Targets entrepreneurs that are ready to scale

Figure 17: Start-Up Chile Programs

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In the summer of 2019, the total number of Start-Up Chile participants amounted to 1,616. The six-month Seed Program is still the core activity of Start-Up Chile. While the program itself lasts for six months, startups usually stay in Chile for at least nine months in order to settle down in a new place and to exit the program. In July 2018, Start-Up Chile welcomed the 20th Seed Program generation, in which 73 startups from 26 countries were accepted into the program (“Seed | Welcome Generation 20,” 2018). To better understand how this public accelerator works, the Seed Program is described in more detail in the following sections using the five common accelerator elements defined by Pauwels et al. (2016): (i) program package, (ii) strategic focus, (iii) selection process, (iv) funding structure, and (v) alumni relations. The overview of characteristics of the Seed Program is visualized in Figure 18. Program package

Strategic focus

Equity free money and perks

Foreign entrepreneurs

Training, mentors and investors

B2Bs startups

Community and networks Working visa and “soft landing“

Selection process

Funding structure

Open call

100% publicly funded

Alumni relations Worldwide alumni network

Use of externals for first screening

Alumni as “ambassadors “ of Start-Up Chile

CORFO committee's final decision

Alumni as mentors

Counseling Peer-to-peer feedback Demo-day Free coworking space

Figure 18: Start-Up Chile Accelerator Design Seed Program

4.2.2.1 Program Package On its website, Start-Up Chile promotes its programs with four benefits: (i) equityfree money and perks; (ii) training, mentors, and investors; (iii) community and networks; and (iv) working visa and “soft landing,” which refers to various help upon arrival.

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The largest asset of the program package of Start-Up Chile is its provision of equity-free seed capital. In 2019, TSF participants received approximately 25,000 USD for the duration of the four-month long program, while Seed participants received approximately 80,000 USD for the duration of the six-month long program. The money was delivered as a grant that reimbursed the expenses of the startups, and the way they used the money was regulated, as it could only be used to reimburse certain types of expenses, determined by Start-Up Chile. To receive the money, startups had to provide Start-Up Chile with extensive paperwork that proved their spending and that they fulfilled other program requirements. Apart from the equity-free money, participants had access to over 100,000 USD-worth of perks from companies such as Facebook, Stripe, PayPal, Google, Amazon, or Microsoft, which could help lower the cost of online marketing activities or the use of cloud services. The training and other educational components were partly mandatory and offered by the staff of Start-Up Chile, by participants with specific expertise, and sometimes by experts from the Santiago ecosystem and abroad. The so-called Start-Up Chile Academy was compulsory for participants to a certain extent, because many participants, especially the Chilean ones, did not regularly show up in the community. The management team of Start-Up Chile thus used this structural component of the program to encourage local entrepreneurs to engage in the community. The workshops covered essential topics related to entrepreneurship, such as Lean Startup methodology (Ries, 2011), and there was frequent training on how to pitch to investors. Start-Up Chile also had a mentor system, which relied on the pool of alumni, experts from the Santiago ecosystem, and some foreign experts from other, worldwide entrepreneurial ecosystems. Mentors offered their services on a voluntary basis, and there was no intensive and structured mentorship program. Instead, mentors and mentees decided on their collaboration, usually involving some meetings or Skype calls throughout the program. The startups received one anchor mentor but had an option to ask for additional mentoring when needed. Start-Up Chile has been engaged in the development of the investor’s community in Santiago. This community remains rather small compared to other ecosystems worldwide, but Start-Up Chile has actively tried to grow it by creating the Investors Club, which provides its program participants with exclusive access to financial capital. The community and network are important assets of Start-Up Chile. According to its website, Start-Up Chile claims to be one of the most significant and most diverse startup communities in the world, with more than 1,300 startups and more than 3,500 entrepreneurs. There are some formal but many more informal community events, such as pub crawls, private parties, and hiking in the mountains.

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Especially at the beginning of the program, Start-Up Chile is actively involved in forming the community, organizing ice-breaking events and other activities to bring the new participants together and foster community development. They are especially concerned with the integration of the Chilean participants, who nevertheless often fall back to their local community and are mostly not active members in the Start-Up Chile community due to the language and culture barriers. The community members actively help each other in diverse fields, ranging from business-related tasks in the coworking space to private matters, over communication tools such as Slack channels, Facebook, and WhatsApp groups. The community creates an overall positive atmosphere during the program, with mutual encouragement amplifying motivation. Foreign entrepreneurs are heavily involved in the Start-Up Chile network and often initiate numerous get-togethers or small informal workshops on specific topics to disseminate their knowledge. The reach of the overall network is not limited to the members of the Start-Up Chile community but creates access to essential external business partners and to entrepreneurs from similar industries, who can help with particular insights and connections. Additionally, Start-Up Chile hosts events, such as the monthly Tech Evening4, wherein they initiate a meeting day between Chilean companies and Start-Up Chile participants. The “Tech Evening” brings together investors, experts, and entrepreneurs from specific sectors to facilitate pitches of 10–15 startups. This event is held in Spanish, which excludes the non-Spanish speaking foreign stakeholders. While Start-Up Chile offers soft-landing support for foreign startup entrepreneurs, the working visa is not provided directly by Start-Up Chile but by relevant authorities, which makes the acceptance rate of working visa not 100%. Acceptance to Start-Up Chile generally allows program participants to take advantage the Visa Tech Initiative, which seeks to streamline the visa process by offering certificates of sponsorship and can reduce the time required to obtain a working visa to two weeks. Start-Up Chile “soft landing” includes activities and help for the foreign participants before and upon arrival, and apart from providing helpful information, the accelerator helps them with some legal documents and opening a bank account. Furthermore, foreign participants receive support from locals who are members of the Start-Up Chile network and from program participants so as to not be completely lost after their arrival in Santiago. Despite the support from Start-Up Chile, the overall arrival process of foreign entrepreneurs is time-consuming and stressful, often reducing the available time to work on the startups during the first few weeks.

4

Networking event in Spanish at the Start-Up Chile coworking space. Each time a different industry focus. Incorporates several startup pitches

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Start-Up Chile’s management team also offers counseling services, which participants can book once a week. Some of the management has experience in marketing or public relations and can help the program participants in these specific areas. Furthermore, they can access their network if needed. Notably, what is missing in the management team is entrepreneurial experience, which makes startup-related advice more general and less relevant to the concrete problems faced by the participants. Participants respect the management and their advice but sometimes do not take their suggestions regarding entrepreneurial challenges seriously due to their lack of entrepreneurial background. Overall, the management and the startups have excellent relationships, and the management actively strives to improve the participants’ community experiences and facilitate the development of good connections. There are also mandatory counseling services that are geared towards reviewing and tracking the progress of the startups and providing peer-to-peer feedback. Start-Up Chile forms small groups of around 8–10 startups at a similar development stage and industry, which are called platoons. The platoon takes place every three weeks for about two hours and is led by one account executive of Start-Up Chile, whose role is to make sure that government money is spent under the right conditions and that startups fulfill the necessary bureaucratic work. In the platoons, their role is mainly to track the progress of startups and ask questions regarding particular challenges that they face. At the end of every platoon, startups must set goals for the next three weeks, and these are reviewed at the beginning of the next platoon. This rule creates some level of accountability and milestones, which is helpful for some of the startups. In the platoon, the ability of the account executive to facilitate fruitful peer-to-peer feedback is central; otherwise, platoons can turn to a simple dialogue between the account executive and the startup that focuses purely on traction, leaving out the peer-to-peer feedback that many founders describe as especially helpful. One week before every platoon, there is the socalled pitstop, wherein startups must send documents that provide key performance indicators on their progress to their account executives. Startups can also submit inquiries for help through the pitstop documents. Throughout the program, there are several milestone meetings in which account executives and startups meet face-to-face to go through topics such as how the startups spend money and whether they fulfilled the required processes and achieved progress during the program. In addition to the soft-landing services, Start-Up Chile’s location services also are worth mentioning; these include the use of a dedicated coworking space free of charge for nine months. In 2018, Start-Up Chile moved into its own sizable coworking office, in which both staff and participants work in the same building. Before they moved to this new place, Start-Up Chile rented two coworking spaces

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for its participants, which were also used by other entrepreneurs unrelated to StartUp Chile in the Santiago entrepreneurial ecosystem. This provided opportunities for random encounters, which could lead to unexpected and fruitful relationships. The offices of Start-Up Chile’s staff were located in different places, however, which prevented closer collaboration and quicker accessibility. The participants not only use the coworking space to work on their startups but also to exchange ideas and help their peers or receive help. The author observed that the coworking space has an open atmosphere with lots of natural light, and its business furniture is colorful and modern. One large area is dedicated to relaxation, with comfortable couches. Meeting rooms can be booked and are used to train smaller groups and platoons, and one room is dedicated to events and workshops, with lots of chairs and a large screen with a beamer. Events that take place here are also often streamed to the internet via Start-Up Chile's social media. The kitchen is usually a place for spontaneous encounters between participants, in which ideas and experiences related to their entrepreneurial endeavors are shared and discussed. The coworking space also has a roof-top terrace, which can be used for private occasions under the excellent weather, and an important weekly community event also takes place here every Friday. By convention, participants from each country or region had to prepare an international lunch with food representative of their home countries, with these lunches concluding each working week and helping strengthen the community and facilitate participant interaction. Start-Up Chile also organizes a demo day, in which it invites guests from the local entrepreneurial ecosystem, with a focus on investors, to watch the startups pitch their achievement. The difference between Start-Up Chile’s demo day and the conventional form of demo day is that only a minority of participants are allowed to present their startups. These startups are selected based on a non-transparent ranking by the staff of Start-Up Chile. One selection criterion is an internal midterm pitch in which all participants have to participate, while other criteria are involvement in the community, such as the impact that the startup has on Chile’s local communities and the proactiveness that startups show in their contribution and commitment to the program. There is one mandatory part of the program directly related to Start-Up Chile's policy objectives that differentiates it from other accelerators. While founders receive equity-free money, they are required to engage in the entrepreneurial ecosystem. This engagement is measured and tracked via the so-called Return Value Agenda, in which founders receive points for their activities and engagement in the local entrepreneurial ecosystem. These points are based on the type of engagement and the number of people reached in the activity. To be able to receive StartUp Chile’s full grant, participants must acquire a certain number of points. StartUp Chile has established many partnerships within the entrepreneurial ecosystem, which can be used by program participants to engage in such activities.

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Nevertheless, entrepreneurs must proactively seek opportunities to give something back to local Chilean entrepreneurial ecosystems in exchange for the equity-free money. The main objective of this system was to build social capital within the nascent entrepreneurial ecosystem and to change the Chilean entrepreneurial culture and people’s mindsets regarding startups. Start-Up Chile focuses on five stages in which participants can interact and impact the local entrepreneurial ecosystem: (i) inspire, (ii) create, (iii) build, (iv) support, and (v) grow. Entrepreneurs can give lectures and speeches at universities to inspire the next generation of entrepreneurs in Chile. They can organize events in which others can create new ideas, such as Hackathons or Startup Weekends. They can help build new, local startups by mentoring Chileans with ideas who want to start their own company. They can support programs, such as TSF and other incubators within the Santiago entrepreneurial ecosystem through mentorship and advice. Finally, they can grow the ecosystem or community by organizing topic-specific meetups and introducing new people to the entrepreneurial ecosystem. 4.2.2.2 Strategic Focus When Start-Up Chile was initiated, its primary strategic focus was bringing foreign startups to Chile. Therefore, Start-Up Chile set its geographical focus on the target group of global entrepreneurs who are ready to come to Chile and spend several months in Santiago and did not have a particular industrial focus. The only objective in the initial phase was to bring talent to Chile to stimulate the growth of the Santiago entrepreneurial ecosystem and to change the mindset of local people towards startups to encourage them to be more entrepreneurial and growth-oriented. In 2014, only three years after the official launch of Start-Up Chile, the strategic focus began to shift. The main reason for this change was the election of a new Chilean president, who had a different political intention regarding entrepreneurship policy than her predecessor. Furthermore, CORFO and the Start-Up Chile management team assessed the first several years of the program and concluded that they had achieved visible success regarding the initial objective of changing the local mindset. This was reflected in a study by Leatherbee and Eesley (2014): “We found compelling evidence that the studied policy was able to improve the entrepreneurial behaviors of its target group of domestic entrepreneurs by leveraging social interaction with foreign entrepreneurs who had more effective entrepreneurial behaviors to start with” (p. 25). Instead, the strategic focus of Start-Up Chile began to shift towards producing more explicitly social and economic outcomes than before. One example of the

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social impact oriented strategic focus is the initiation of TSF, which focuses on female entrepreneurship. Another example is the fact that Start-Up Chile began to pay particular attention to the development of entrepreneurial support in regions outside Santiago. During the acceleration program, Start-Up Chile now sends some participants to rural areas or other regions to deliver speeches or lectures on entrepreneurship-related issues. Furthermore, Start-Up Chile offers financial incentives for program participants who move their legal location to one of the selected rural regions after completing the program. In addition to these social objectives, Start-Up Chile began to shift its economic objectives, aiming to impact the entrepreneurial ecosystem on a more long-term than a temporary basis. In the initial stage, most of the international startups left Chile after attending the program, having come to Chile for the program and the equity-free money and lacking reason to stay when the program was over. To reduce the number of foreign entrepreneurs immediately leaving the country, StartUp Chile began to offer incentives to keep them in the ecosystem. Accordingly, Start-Up Chile re-defined the selection criteria of program participants. First, the preferred business model for startups shifted from business-tocustomer (B2C) to business-to-business (B2B). One reason is that B2C startups tend to seek the development of their customer/user base outside Chile, as the country has only around 17 million inhabitants and does not offer a sufficiently large customer base for a scalable business. Second, Start-Up Chile began to prioritize startups with a geographical focus in South America, since it realized that startups would only stay in Chile after the program if their market focus lay in South America. As a result of these shifts in strategic focus and objective, StartUp Chile changed its participant structure, which now consists of more startups that are from Chile and South America and that operate on a B2B basis. For instance, generation 18 of the Seed Program, which took place when the author conducted the in-depth interviews in 201,7 was composed of almost 43% Chilean startups and only 7% European startups, and fully 70% of startups pursued a B2B type of business model (“Seed G18 Results,” 2017). 4.2.2.3 Selection Process The selection process of Start-Up Chile begins with an open call, allowing entrepreneurs to apply to the program. The first emphasis in the application form is information on the startup, its team members, the benefits that the startup expects from Start-Up Chile and its expected impact on Chile. Applicants are asked to answer questions on diverse topics regarding their startup, the problem they are solving therewith, their product, its technology, and its development stage; their revenue model, target market, sales numbers, competition, and global expansion plans; and why Chile is attractive for their startup. The second emphasis of the

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application form lies on the team, and applicants must answer questions on their education, professional experience, or unique life accomplishments. In addition to these questions in the application form, applicants must submit at least one letter of recommendation. The application is completed with a 90-second video of the team in which they explain their startup. According to the terms and conditions of the Seed Program, the selection process itself has three stages (“Seed Terms and Conditions,” 2018). The first round of evaluation is outsourced to the Silicon Valley-based startup YouNoodle, an online platform specialized in evaluating startups. Evaluation criteria are the video, which is weighted at 70%, and the growth potential, weighted at 30%. From this evaluation, up to 500 startups are selected to be evaluated by a CORFO committee, which decides which startups move to the second stage of the selection process. At this stage, the selection criteria are the qualifications of the team leader, the composition and qualification of the team, the market positioning, and the product or service, each weighted with 25%. From this round, the CORFO committee approves 150 projects for the final stage, in which applicants have a telephone or video conference interview with a Start-Up Chile executive. A ranking is then created based on the qualifications of the team (30%), the market and competitive position (20%), the product (15%), and the expected impact of the startup in Chile (30%). This final ranking is presented to CORFO’s committee, which decides which startups are to be accepted into the program. 4.2.2.4 Funding Structure The funding structure of Start-Up Chile is rather simple. It is a 100% publicly funded accelerator without alternative revenue streams except for sponsors of perks, pitch competition prizes, and events. As Start-Up Chile is entirely backed by the government, it is dependent on the allocation of capital and the determination of its strategic objectives of the government. Furthermore, as Start-Up Chile is financed with Chilean taxpayer money, the program and activities of participants are regulated, which leads to a high level of bureaucracy. Founders have mandatory administrative activities, such as giving lectures at universities, and they must provide detailed evidence of this type of activity, including a list with email addresses and signatures of all students who participated in the lectures. 4.2.2.5 Alumni Relations Alumni are an essential asset of Start-Up Chile, forming a global network that helps Start-Up Chile’s activities in four ways. First, the network spreads the word

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and promotes the program around the world. The promotion of alumni entrepreneurs who act in entrepreneurial ecosystems in diverse countries leads to a great deal of good publicity for Start-Up Chile, which results in a growing number of applications. The increase in the number of applications has been associated with an increase in the quality of program participants. Second, some alumni help StartUp Chile by mentoring its startups, and through this alumni entrepreneurial engagement, Start-Up Chile has built a global mentor network. Third, alumni help the current participants of acceleration programs at Start-Up Chile by providing information and contacts in foreign markets, which can be invaluable for the smooth internationalization of the businesses of these startups. Fourth, alumni indirectly represent Start-Up Chile, which means that their success is associated with the performance of Start-Up Chile, which in turn helps acquire qualified participants in the future. Start-Up Chile therefore tries to continually nurture and maintain its relationships with its alumni. Apart from a regular newsletter and closed Facebook groups, Start-Up Chile also actively contacts former participants to ask about the progress and whether they need any help. They also organize events for alumni and invite them for a visit to Santiago. In fact, the author encountered several alumni in the coworking area who came to visit Santiago. In this way, there are face-to-face encounters between current and former participants, which creates valuable exchanges between generations. 4.2.3 Objectives and the Proclaimed Impact of Start-Up Chile In its terms and conditions, Start-Up Chile declares its objectives as follows: “To generate a social and economic impact in Chile through the support of innovative startups that will sophisticate and diversify the economic matrix of the country.” It further specifies these objectives as “a) To attract and accelerate technology-based entrepreneurs with global markets (Chilean and foreigners), so they can see Chile as an attraction for their global businesses; b) increase the economic impact of the startups from the program in Chile; c) to contribute the growth of an entrepreneurial ecosystem that is sustainable, democratic and diverse, facilitating the connection between entrepreneurs, investors, companies, and organizations; and d) to establish Chile as a leader of entrepreneurship and innovation at a global scale” (“Seed Terms and Conditions,” 2018, p. 2). One thing that characterizes these objectives of Start-Up Chile is the articulation of their strong willingness to develop a local entrepreneurial ecosystem. Unlike investor and corporate accelerators (Cohen et al., 2019; Drori & Wright, 2018; Pauwels et al., 2016), Start-Up Chile, as a public accelerator, aims primarily at

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thriving the development of the Santiago entrepreneurial ecosystem, rather than pursuing their own sake. It is unsurprising that Chilean people were skeptical about the strategic prioritization of foreign entrepreneurs in Chile and the enormous investment in “outsiders,” especially because Chile’s economic situation was, at the time, highly unfavorable due to the natural catastrophe. However, the skepticism faded when the impact of Start-Up Chile on the growth of the Santiago entrepreneurial ecosystem became more visible: “The fears the locals had had about the program taking their jobs away proved to be unfounded. In fact, the opposite occurred. Foreign startups scoured local colleges for talent and started hiring and partnering with locals. Meanwhile, Chilean entrepreneurs saw tremendous value in having access to global networks and in the knowledge they could gain. (…) Most important, Silicon Valley-style entrepreneurship has been spreading across the country. The events I attended during my last two trips to Chile were at least as dynamic as those that take place in Silicon Valley every night” (Wadhwa, 2012, pp. 26-27). On its website, Start-Up Chile presents statistics up to March 2016 regarding its impact (“Start-Up Chile Impact,” n.d.). Start-Up Chile has accelerated more than 4,000 entrepreneurs with 1,400 startups from 79 countries through its Seed Program, and 76.7% of these remain active. The combined valuation of the startups that participated in Start-Up Chile is 1.4 billion USD, and they raised 420 million USD in follow-up investment rounds, with one out of three startups managed to obtain follow-up funding after the program. The startups achieved 276 million USD in sales, of which 42.6 million were generated in Chile, and during their stay, startups on average doubled their client portfolio. More than 5,000 jobs have been created, of which more than 1,500 were advanced human capital in Chile. Altogether, 34% of startups remained in Chile after their participation, and for the Return Value Agenda, the participants initiated more than 5,000 activities and events with more than 300,000 attendees (“Start-Up Chile Social Impact,” n.d.). Around 92% of the people participating in these events claimed to be extensively satisfied. Start-Up Chile generated more than 10,000 press publications worldwide, such as in The Economist, which wrote in 2012 that “Many countries have sought to create their versions of Silicon Valley. Nearly all have failed. However, Chile’s attempt is interesting because it exploits the original Silicon Valley’s weak spot—America’s lawful immigration system. When the home of free enterprise turns away entrepreneurs, Chile welcomes them.” In 2016, the Huffington Post wrote, “Now, thanks to Start-Up Chile, a true startup ecosystem has been born, with every main university in Chile offering its own masters in entrepreneurship and many startup events and entrepreneurship festivals” (“How Start-Up Chile Put Their Ecosystem

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on the Global Map and Became a Benchmark for Other Countries,” 2016). In recent years, more than 50 countries have created similar programs to stimulate their regional entrepreneurial ecosystems (“Start-Up Chile Impact,” n.d.).

5 Results This chapter demonstrates how a public accelerator facilitates the development of a nascent entrepreneurial ecosystem by following the emerging data structure presented in Section 3.3. The data structure consists of five mechanisms that correspond to the role of public accelerators in the early evolution of an entrepreneurial ecosystem: (i) acquiring resources from outside the ecosystem (Section 5.2); (ii) integrating and accumulating acquired resources in the accelerator (Section 5.3); (iii) developing entrepreneurial ecosystem resources (Section 5.4); (iv) coordinating the ecosystem resource flow (Section 5.5); and (v) facilitating entrepreneurial ecosystem resource recycling (Section 5.6). Each of these sections is subdivided into second-order categories of the data structure. Before the data structure is explained in detail, the structure of a conceptual model that is developed is presented (Section 5.1). Following the principles of thick description introduced in Section 3.4 (Stake, 2010), each section presents empirical evidence that supports emerging causalities. The author contrasts these emerging causalities not only with the literature on entrepreneurial ecosystems but also with other theoretical lenses, such as resource orchestration (Sirmon, Hitt, & Ireland, 2007; Sirmon, Hitt, Ireland, & Gilbert, 2011) and complex adaptive system views (Roundy et al., 2018), that may provide additional explanation of the results of this study in the process of theoretical coding (also explained in Section 3.3). Based on discussions, each section develops a set of research propositions (RPs), which follow the nature of interpretive theories, aiming “to understand meanings and actions and how people construct them” (Charmaz, 2014, p. 231). The purpose of developing research propositions in this study is to consolidate and explicate the emerging causalities in a simple format. 5.1 Public Accelerators as Resource Orchestrators in Nascent Ecosystems This section presents the structure of the emerging conceptual model that explains how a public accelerator uses its role as an anchor tenant to orchestrate ecosystem resources, thereby creating initial evolutionary dynamics in a nascent entrepreneurial ecosystem. Following the qualitative data analysis and construction methods suggested by Gioia et al. (2013), this study first analyzed empirical data inductively, then moved to an abductive approach, in which the author contrasted emerging categories with extant research, to develop the final five categories. In this shuttlecock process, the author encountered the concept of resource orchestration (Sirmon et al., 2011), which helps this study structurally explain emerging causalities to develop a conceptual framework.

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020 J. Harima, Public Accelerators in Entrepreneurial Ecosystems, https://doi.org/10.1007/978-3-658-31655-6_5

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This concept centers around three main processes (Figure 19): (i) structuring, (ii) bundling, and (iii) leveraging. i) Structuring refers to the management of resources with the three subprocesses acquiring, accumulating, and divesting. First, resources can be acquired outside from outside the boundaries of a firm or a region. Second, resources can be accumulated and developed internally. Third, resources that are not needed can be divested. ii) Bundling refers to the construction and refinement of capabilities by combining resources in terms of the three sub-processes stabilizing, enriching, and pioneering. First, stabilizing refers to incrementally improving capabilities by combining resources. Second, enriching involves combining resources to extend existing capabilities. Third, new capabilities can be pioneered, thus being newly created, by combining resources in new ways. iii) Leveraging involves applying capabilities with the three sub-processes mobilizing, coordinating, and deploying. First, mobilizing refers to the identification of necessary capabilities. Second, capabilities can be coordinated by integrating them into capability configurations. Third, deploying refers to the use of capability configurations to achieve a certain goal. Resource Orchestration Processes

Resource Structuring Managing the resourcebase: • • •

Acquiring Accumulating Divesting

Resource Bundling

Resource Leveraging

Combining resources to construct capabilities:

Applying capabilities:

• • •

• • •

Stabilizing Enriching Pioneering

Mobilizing Coordinating Deploying

Figure 19: Resource Orchestration Process

Based on Sirmon et al. (2011) Although resource orchestration was developed in organizational contexts, it offers insights that can be useful to nascent ecosystems, especially regarding the role of anchor tenants. As discussed in Section 2.3.2, anchor tenants are central stakeholders that influence other (potential) ecosystem actors and encourage interactions, thereby catalyzing early evolutionary dynamics of an entrepreneurial ecosystem (Colombelli et al., 2019; Spigel & Harrison, 2018). The influence of such

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anchor tenants on the overall ecosystem is proportionally more significant in a nascent entrepreneurial ecosystem, as the degree of complexity is lower (Roundy et al., 2018). An entrepreneurial ecosystem cannot be considered an organization; instead, an early-stage ecosystem is a community with a limited size and number of interactions among stakeholders and that is coordinated by one or a few anchor organizations. However, what this study observed in the empirical case of StartUp Chile in the Santiago entrepreneurial ecosystem was surprisingly similar to the resource orchestration observed in organizational contexts as presented by Sirmon et al. (2007, 2011). The empirical data revealed five activities with which the public accelerator StartUp Chile influenced the development of the Santiago ecosystem. The time-limited program that restarts periodically enables the accelerator to conduct all five activities simultaneously. However, when analyzing each batch of participants on their own, all five activities are performed in a sequential manner. First, resources from outside the ecosystem are acquired (Section 5.2). Second, they are further developed within the accelerator (Section 5.3). Third, the developed resources are injected into the ecosystem in order to further develop the ecosystem’s resource base and create new ecosystem capabilities (Section 5.4). Fourth, the accelerator bundles its resources in order to coordinate the resource flow (Section 5.5). Finally, the accelerator facilitates the recycling of resources of startups from the network of the accelerator (Section 5.6). The first two activities are directed towards attracting and creating resources and capabilities for the accelerator, which strengthens its position as an anchor organization of the ecosystem. These resources and capabilities are then utilized in the latter three accelerator activities, which are specifically directed towards developing the ecosystem. Interestingly, the five activities and their sequence are mirrored in the evolution of the nascent Santiago ecosystem. Thus, a nascent ecosystem profits more from certain resources and capabilities depending on its evolutionary stage. First, the Santiago ecosystem had a scarce resource base and needed to acquire and develop resources. Second, the small evolving community of Start-Up Chile developed resources and capabilities. Third, these resources and capabilities were then spread throughout the ecosystem, which sparked multiple interactions among various actors. Fourth, the evolving shared entrepreneurial culture and growing numbers of connections provided the ecosystem with capabilities to facilitate and coordinate resource flow. Fifth, with growing numbers of entrepreneurial activities and growing and thriving startups, resource recycling will become more critical for the Santiago entrepreneurial ecosystems. Figure 20 presents the conceptual model of resource orchestration by public accelerators in the early evolution of an entrepreneurial ecosystem.

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This model visualizes five different means of public accelerators resource orchestration. The spiral in the middle of the figure represents the evolutionary process of an entrepreneurial ecosystem. As suggested by Roundy et al. (2018), an entrepreneurial ecosystem can be understood as a complex, adaptive system that follows a non-linear development path. In different evolutionary stages, the way in which an anchor tenant mobilizes entrepreneurial resources differs to a great extent. The rectangles within each circle represent the organizational boundary of different stakeholders with a white rectangle of the public accelerator. As the ecosystem reaches more mature evolutionary stages, one can see that the size of public accelerator rectangle becomes smaller compared to the circle, which represents the boundary of the ecosystem. In this way, this model integrates the transformation regarding the role of anchor tenants in the course of ecosystem evolution, discussed in Section 2.3.2. In the following, the rationale behind the model is explained. The upper-left circle represents the first resource orchestration mechanism, which helps to structure ecosystem resources by acquiring new resources from foreign entrepreneurial ecosystems. Thick black arrows depict the inflow of resources that foreign entrepreneurs bring into the ecosystem. At this stage, the anchor organization plays a dominant role, and intensive interactions among stakeholders outside the anchor organization can scarcely be seen. In the case of Start-Up Chile, this study observed that the Santiago ecosystem gained three main types of resources by attracting foreign entrepreneurs with equity-free money: (i) diverse entrepreneurship-related knowledge (Section 5.2.1, RP1); (ii) global social capital (Section 5.2.2, RP2); and (iii) an entrepreneurial culture and mindset (Section 5.2.3, RP3). Foreign entrepreneurs brought their unique knowledge, experience, and mindset with them to Chile. Section 5.2 analyzes Start-Up Chile’s resource structuring approach and develops research propositions (RP1, RP2, and RP3).

5.1 Public Accelerators as Resource Orchestrators in Nascent Ecosystems

Figure 20: Public Accelerators' Resource Orchestration in Entrepreneurial Ecosystems

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The upper-right circle is the second mechanism, which is the integration and accumulation of the acquired resources in the accelerator. In this process, the anchor tenant “digests,” so-to-speak, the resources acquired from the outside. Within the anchor organization, some structured approaches emerge, and intensive interactions (colored background) among members of the organization begin to take place. Section 5.3 develops a set of research propositions (RP4, RP5, RP6, and RP7). Based on the empirical case of Start-Up Chile, this study revealed four submechanisms in which a public accelerator systematically integrates external resources: (i) building accelerator community (Section 5.3.1); (ii) building a community-level entrepreneurial culture (Section 5.3.2); (iii) sharing knowledge within the accelerator (Section 5.3.3); and (iv) ensuring organizational learning and knowledge accumulation (Section 5.3.4). Facilitating effective knowledge integration mechanisms was essential for Start-Up Chile, since foreign entrepreneurs, who brought external resources, generally remain only for a limited time. This means that if the resources of foreign entrepreneurs are not integrated into the organization’s structure, both Start-Up Chile and the Santiago entrepreneurial ecosystem would lose access to these resources. Notably, the interactions among different actors remain within the organization in this stage and are not yet outside the anchor tenant. These first two mechanisms of resource acquisition and integration are similar to the structuring process of resource orchestration in organizational contexts (Sirmon et al., 2011). Empirical data demonstrates how an anchor tenant structures resources, attracting foreign entrepreneurs from other worldwide ecosystems in order to acquire entrepreneurial resources, then integrating and developing entrepreneurial resources by facilitating resource accumulation. The circle in the middle-left represents the third mechanism of resource orchestration, namely, the development of entrepreneurial ecosystem resources. This mechanism is the first to aim to orchestrate ecosystem resources outside the boundaries of the public accelerator. Thus, the third circle in the figure also contains other ecosystem stakeholders. This mechanism can be understood as a part of the bundling process in resource orchestration (Sirmon et al., 2011). As literature generally argues, entrepreneurial ecosystems are inherently idiosyncratic, due to their distinctive historical, geographical, and institutional embeddedness, which influences the ecosystems’ unique, continually changing and evolving resource base. As ecosystems are open, rather than closed systems, they can draw on external resources that can be “imported.” Such external resources must be combined with regional resources that are unique to the region to create the substantial evolutionary dynamics of an entrepreneurial ecosystem. To combine both internal and external resources, anchor tenants must facilitate diverse interactions among wide ranges of ecosystem stakeholders.

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Unlike the earlier stages, the interaction depicted as a grey field occurs not only within the organization but also between the anchor organization and other emerging ecosystem stakeholders. The focus of the public accelerator lies outside of its own boundaries. One of Start-Up Chile’s critical activities was the facilitation of such interactions with stakeholders outside the anchor organization. While the time for which foreign entrepreneurs spend in Santiago is somewhat limited, StartUp Chile required them to use part of their time during the program to become active within Chilean entrepreneurial ecosystems and to help develop local entrepreneurial resources. As a result of such initiatives, this study identified five submechanisms with which a public accelerator can develop entrepreneurial ecosystem resources: (i) facilitating diverse interactions among the accelerators (Section 5.4.1, RP8); (ii) activating local talent (Section 5.4.2, RP9); (iii) transferring knowledge from the accelerator to the entrepreneurial ecosystem (Section 5.4.3, RP10); (iv) creating an ecosystem-level entrepreneurial culture (Section 5.4.4, RP11); and (v) creating ecosystem-level social capital (Section 5.4.5, RP12). The fourth mechanism, depicted in the middle-right circle, is analyzed in Section 5.5 and refers to the coordination of ecosystem resource flow, which is related to the enriching and pioneering of the bundling process of resource orchestration (Sirmon et al., 2011). Start-Up Chile and its surrounding interactions triggered the participation of other potential stakeholders within the Santiago ecosystem in the emerging evolutionary dynamics by reducing the entrance barriers for them. Furthermore, the increasing number of interactions between ecosystem stakeholders outside the anchor tenant emerged through the activation and integration of new ecosystem actors. These interactions are not limited to the Santiago ecosystem, but also occur between the Santiago ecosystem and other worldwide entrepreneurial ecosystems. This enabled increasingly diverse types of resources, both external and internal, to be combined, resulting in thriving ecosystem evolution. This combination of resources led to new or improved capabilities of the ecosystem, such as resource flow capability, the integration of new actors and resources, and resource creation capability. In the circles, the size of other stakeholders is larger than before, which indicates their increasing impact on ecosystem development. The size of the anchor organization, by contrast, is becoming smaller. Interactions among stakeholders, which are depicted as a shadow, continue to grow within the circle. Section 5.5 develops research propositions (RP13, RP14, and RP15) to explain the sub-mechanisms of resource flow coordination. Finally, the circle at the bottom represents a well-developed ecosystem that was strengthened with the accelerator activities mentioned above. With the stimulation of various entrepreneurial activities, resources are developed that need to be recycled after a certain entrepreneurial activity ended in order to keep them flowing through the ecosystem. Scholars argue that resource recycling is essential for the

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sustainable development and resilience of an entrepreneurial ecosystem (Brown & Mason, 2017; Spigel & Harrison, 2018). Resource recycling does refer not only to the investment of financial capital that was gained from entrepreneurial success stories, but also to other types of resources, such as knowledge or human and social capital. The Santiago ecosystem has not yet reached a level of ecosystem development wherein resource recycling becomes a core process, as they have too few success stories. However, empirical data shows that there are a few signs of potential resource recycling, and the ecosystem suffers from certain obstacles that hinder it from developing sustainable evolutionary dynamics. In the figure, the role of the anchor organization is clearly no longer dominant, while instead other stakeholders have become increasingly influential. Interactions take place not only within or around the anchor organization but throughout the ecosystem. Interactions even spill over the boundary of the local entrepreneurial ecosystem towards foreign ecosystems. This mechanism is described in Section 5.6, which presents RP16. Following sections present empirical evidence in relation to literature from different fields to develop a set of research propositions. 5.2 Acquiring Resources from Outside the Ecosystem The first mechanism describes how a nascent entrepreneurial ecosystem acquires resources from outside the ecosystem. Nascent entrepreneurial ecosystems are characterized by resource scarcity within the region (Brown & Mason, 2017; Spigel & Harrison, 2018), and they must therefore generate or acquire entrepreneurial resources to create a critical mass of actors. This critical mass of entrepreneurial ecosystem actors facilitates agglomeration effects, such as the growing pool of accessible entrepreneurial knowledge and human capital, which increases the chances of local startup success stories (Spigel & Harrison, 2018). Start-Up Chile was launched by the Chilean government specifically for this purpose – to acquire entrepreneurial resources from outside the local entrepreneurial ecosystem. Before 2010, the Santiago entrepreneurial ecosystem was barely visible in the international startup community, although international reports, such as the “Global Entrepreneurship Monitor” (Bosma, Acs, Autio, Coduras, & Levie, 2008) showed high entrepreneurial activity rates. This contradictory situation may be attributed to the fact that many entrepreneurial activities in Chile were small businesses rather than innovative and growth-oriented startups, and the few startup entrepreneurs in Chile were largely disconnected. At that time, Santiago lacked favorable conditions for growth-oriented startup activities, as knowledge on startup strategies and processes was barely available, and a common entrepreneurial culture of mutual help, growth aspirations, or collaboration was absent. One of the first

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employees of Start-Up Chile and current venture capitalist VC-1 recalled the time around 2010 as follows: The concept here was . . . we know these talented people in Chile. But the culture is not aware of how to do things, how to actually start up a business. (VC-1) Aware of the country’s conditions at the time, including its geographical isolation and conservative business culture – not conducive to fostering startups – the government decided to take ameliorating steps. With the help of Nicholas Shea, a Chilean entrepreneur who studied and worked at Stanford University, the government began to take concrete actions to foster the development of the Santiago entrepreneurial ecosystem, one of which actions was launching the public accelerator Start-Up Chile. Investor VC-2 described Start-Up Chile and its effects: Then there is Start-Up Chile, which is effectively a governmental program; it is like a governmental accelerator [ . . . ] that has attracted a lot of international talent and attention to the country. (VC-2) When Start-Up Chile was created, its sole purpose was to bring in foreign entrepreneurial individuals from other ecosystems. The government aimed to build an entrepreneurial ecosystem by increasing the number of entrepreneurs in Santiago, by connecting local ecosystem stakeholders to the world, and by enhancing the entrepreneurial knowledge and culture within the region. One of the initiators of Start-Up Chile, EE-5, remembered that I found myself in the position of power and pitching to the minister. And I presented a plan. And the last point of that plan was “Let us invite entrepreneurs . . . the best entrepreneurs, or, you know, good-enough entrepreneurs, from all around the world to come to Chile.” His first reaction was, you know, “why the hell would a good entrepreneur who is already in Silicon Valley and all these, you know, spots want to come to Chile?” And I said, you know, “I do not know. Let us just do it and find it out, and let us see how we can make them come to Chile.” (EE5) This quote demonstrates the strong belief that Chile needs entrepreneurial talent from outside and that this could be the only way to develop a flourishing entrepreneurial ecosystem. The Chilean minister of economy was initially not convinced that foreign entrepreneurs would come to the Santiago entrepreneurial ecosystem. Furthermore, attracting foreign entrepreneurs required a large continuous investment from the Chilean government, and there was a high uncertainty regarding the outcome. EE-5 was more optimistic, because he had first-hand experience with global entrepreneurs in the US. Attracting global entrepreneurial talent to Chile required creativity to enhance the attractiveness of the Start-Up Chile program, so EE-5 and his team assembled a program with various benefits for entrepreneurs,

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such as equity-free money, which reduced the barriers to foreign startups relocating to the Santiago entrepreneurial ecosystem. EE-5 remembers that We came with this package for foreign entrepreneurs that was bait for them to come to Chile. (EE-5) Actively bringing entrepreneurs from the outside to the entrepreneurial ecosystem can be a quick way to increase startup density and facilitate agglomeration effects. In the case of Start-Up Chile, the bait of equity-free money was interesting enough to lure thousands of foreign entrepreneurs to Chile, over the course of fewer than seven years. EE-5, who was actively involved from the beginning, concludes, Yeah, so 1,700 companies and, like, 3,000 entrepreneurs, because there was usually a couple behind every startup, plus their families, and, you know, we have pretty much created our own, you know, ‘Chilecon Valley’, as the economist named it in October of 2013, and we served the purpose which was to position Chile as an innovative entrepreneurship hub in Latin America. (EE-5) First-Order Categories • Worked in different industries • Worked in certain industries in other countries • Studied engineering and business • Sales skills from different corporate jobs • Unique skills from past jobs

Second-Order Categories

Industry-specific knowledge

• Founders from abroad at forefront of technology • Worked in innovative companies • Academic knowledge

Technological knowledge

• Business experience around the world • Market entry knowledge of countries abroad • Studied abroad

Global market knowledge

• Past startup experience • Funding experience • Other accelerator experience

Entrepreneurial knowledge

• Connected to global startups • Connected to global investors • Connected to global support organizations • Connected to global universities

Aggregated Dimensions Section 5.2.1

Acquisition of specific knowledge

Section 5.2.2 Global entrepreneurial social capital

• Worked in global corporations • Connected to global competitors • Connected to global suppliers

Global industrial social capital

• Informal network that has valuable connections • Contacts for business-to-customer validation

Global informal social capital

Acquisition of global social capital

Section 5.2.3 • Fail fast culture from abroad • Global startup mindset • Mutual help and collaboration culture • Startup success cases • Persuasive entrepreneurs

Entrepreneurial culture and mindset

Entrepreneurial role models

Figure 21: Data Structure of Acquiring Resources from Outside the Ecosystem

Acquisition of entrepreneurial culture

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Start-Up Chile attracted foreign talent who brought diverse types of entrepreneurial resources with them to Chile. This acquisition of external resources played an important role in kickstarting the development of the ecosystem in Santiago de Chile. The following sections present three types of resources that Start-Up Chile predominantly acquired by bringing foreign entrepreneurs to the Santiago ecosystem: (i) specific knowledge (Section 5.2.1); (ii) global social capital (Section 5.2.2); and (iii) entrepreneurial culture and mindset (Section 5.2.3) (Figure 21). 5.2.1 Acquisition of Specific Knowledge Around 2010, the Chilean startup scene was dispersed and disconnected. Several well-informed interview partners, such as VC-1 and VC-2, said that low numbers of startups and a lack of entrepreneurial experience and knowledge were several problems faced by aspiring entrepreneurs during this time. This situation meant that few actors possessed valuable knowledge regarding startup activities and did not share it with other actors. Start-Up Chile was founded to acquire startup-related knowledge from abroad, mainly in four areas: (i) industry-specific knowledge, (ii) global market knowledge, (iii) technological knowledge, and (iv) knowledge on entrepreneurial processes. The knowledge acquisition of “outsiders” guaranteed the growth and diversity of the local knowledge pool by continually bringing foreign entrepreneurs to Chile. The investor VC-3, who recently became active in the Santiago entrepreneurial ecosystem noted that The real business was that the people coming from Europe, North America, et cetera, to Chile brings us much new knowledge, new ways of doing things. So for me, it was absolutely crucial. And a few Chilean startups joined them and began to interact between them. It was the way of getting knowledge from outside. (VC-3) The foreign entrepreneurs brought knowledge regarding the application of new technologies, industries, global markets, and entrepreneurial processes, that was not available in Chile. The first knowledge type concerned the entrepreneurial application of advanced technologies. Venezuelan entrepreneur FE-11, for instance, used the innovative technology “augmented reality”5 as a means of child education. The fact that foreign entrepreneurs actively introduced such new technologies to existing markets in Chile contributed to building knowledge on applying advanced technology within the entrepreneurial ecosystem. 5

Augmented reality is an interactive experience of a computer-generated enhancement of a real-world environment.

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The second important type of knowledge was industry-specific know-how. Most of the participants of Start-Up Chile had previous work experience in one or several industries. American entrepreneur FE-10, one of the older participants, described their curriculum vitae as follows: I attended university in Arizona, which is actually Arizona State University, to be particular, in the Phoenix area. I lived there and started my career there, basically [in] like professional business development, sales, marketing, a number of different industries, for about ten years before I started my first venture, which is now again twenty-one years ago. (FE-10) As this quote shows, FE-10 has rich and broad experience in different industries, as well as years of entrepreneurial experience in the US. When participants such as FE-10 spent several months in the program, interacting with other participants and ecosystem actors, their knowledge and experience were available within the Santiago ecosystem. The third knowledge type was about the global market and startup scenes. Foreign entrepreneurs brought extensive knowledge about global markets and startup scenes, which became accessible for local Chilean entrepreneurs, who had limited foreign experience. For instance, FE-8 was a Colombian entrepreneur and, before joining an acceleration program at Start-Up Chile, had worked for different startups, helping them with their market entry in Latin America, And after that, I worked with a very big startup [ . . . ] that is Malaysian, and I helped them to open their office in Buenos Aires. (FE-8) To show the value of this global market knowledge, FE-8 continued to explain how she delivered her knowledge about barriers and ways to enter markets outside Chile to other Chilean entrepreneurs: I came, explaining how a startup that is already selling [its products or service] in Chile can sell in another country in Latin America. So, I told them, like, the barriers that you have, how can you overcome them, what are the main things you have to do and look after when you are looking for a new market, what kind of markets are more open to different types of offers and services, [and] the legal barriers to go to another country. (FE8) In her previous jobs, FE-8 worked for successful foreign startups that entered South American markets. This job required her to acquire explicit knowledge, such as the mentioned legal barriers, which was accessible for other Start-Up Chile participants. FE-8 also helped her fellow participants in their foreign market entrance by applying her knowledge, which was mainly based on the experiences with the market entries with which she was involved. The fourth type of knowledge that Start-Up Chile acquired was knowledge about the entrepreneurial process. Entrepreneurial processes are not linear or universal. In fact, most challenges and problems that entrepreneurs face daily are context-

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specific, with a high degree of complexity, and require entrepreneurs to continually learn and to be extremely flexible to dynamic environments (Sullivan, 2000). While general, more explicit knowledge, such as information on innovation methods and processes, is available through books, websites, and other sources, more context-specific entrepreneurial knowledge is often of an experiential nature (Politis, 2019). This unique knowledge rooted in context and experience is called tacit knowledge (e.g., Polanyi, 2009). Most foreign entrepreneurs who come to Start-Up Chile have valuable tacit knowledge of entrepreneurial processes, which stems from their current startup, past entrepreneurial endeavors, or interaction with serial entrepreneurs, support organizations, or investors in their home entrepreneurial ecosystem. Foreign entrepreneurs FE-3 and FE-10 described their tacit knowledge as follows: There is a lot of stuff that I learned from my previous business that I can apply today. (FE-3) I am a forty-nine-year-old American Entrepreneur. Multiple time founder, four companies over the course of the last twenty years. (FE-10) A large number of foreign entrepreneurs attracted to the Santiago ecosystem through Start-Up Chile brought their experience about different entrepreneurial processes in diverse contexts, which created a unique pool of tacit knowledge. The case of Start-Up Chile thus demonstrates that a public accelerator can successfully attract experienced foreign entrepreneurs to its ecosystem by incentivizing them with equity-free money. Since all these entrepreneurs had diverse experiences in both entrepreneurial activities and different industries, the public accelerator gained temporary access to their unique knowledge pool. The empirical evidence shows four different types of knowledge that Start-Up Chile acquired by attracting foreign entrepreneurs: (i) entrepreneurial application of advanced technology, (ii) industry-specific knowledge, (iii) knowledge about global markets, and (iv) entrepreneurial process. Generally, entrepreneurship literature also supports the importance of these types of knowledge for entrepreneurs. Literature suggested that startups often integrate advanced technology into their business model to create unique entrepreneurial value (Freeman & Engel, 2007; Lubik & Garnsey, 2016). For instance, fintech startups innovatively apply new technologies to their business model to deliver new value in the financialservices industry, eventually changing the conventional structure of the traditional financial sector (Lee & Shin, 2018; Leong et al., 2017). Similarly, entrepreneurship scholars have discussed the importance of founders’ human capital in their entrepreneurial activities. They generally agreed for instance that the previous experience and knowledge of entrepreneurs about specific industries positively impacts venture performance and survival (Colombo & Grilli, 2005; Dencker, Gruber, & Shah, 2009; Oe & Mitsuhashi, 2013; West, Page & Noel, 2009).

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Another example is knowledge on global markets, that improves ventures’ internationalization strategies and eventual market entries (Yeniyurt, Cavusgil, & Hult, 2005; Zhou, 2007). The fourth type of knowledge concerns the entrepreneurial process, and this is of a more tacit nature than other knowledge types. Scholars share a standard view that entrepreneurship is not a linear development but a dynamic process in which entrepreneurial individuals extensively improvise (Bingham, 2009; Vera & Crossan, 2005) and follow an effectuation logic (Chandler, Detienne, Mckelvie, & Mumford, 2011; Sarasvathy, 2001). Entrepreneurial processes are profoundly embedded in contexts (Welter, 2011). Due to its complex, dynamic, and context-specific nature, entrepreneurs’ tacit knowledge about entrepreneurial processes is highly valuable, yet more difficult to obtain (Nonaka & von Krogh, 2009; Roberts, 2006). The literature on entrepreneurial ecosystems suggests that nascent ecosystems are characterized by the lack of this type of tacit knowledge (Brown & Mason, 2017; Spigel & Harrison, 2018). One way to increase the number of sources and the overall diversity of tacit knowledge is to acquire knowledgeable individuals from outside the local entrepreneurial ecosystem. Foreign entrepreneurs brought diverse sets of new specific knowledge to the Santiago ecosystem that enriched the local knowledge pool. RP1: By incentivizing experienced foreign entrepreneurs from outside the ecosystem to move their location and stay within the ecosystem for a certain period of time, public accelerators gain initial access to valuable knowledge, such as industry-specific knowledge, knowledge on the use of advanced technologies, global market knowledge, and knowledge on entrepreneurial processes. 5.2.2 Acquisition of Global Social Capital Foreign entrepreneurs who entered the Santiago ecosystem not only possessed valuable specific knowledge but also access to networks in other countries around the world. Most of the foreign entrepreneurs have networks in several different countries, as they had lived and worked outside their homeland before they came to Chile as Start-Up Chile participants. The following three quotes come from the three foreign entrepreneurs FE-8, FE-5, and FE-7 and show that their foreign experience gave them opportunities to build international networks: [When] I was 17, so ten years ago or 11 years ago, I moved to London, then Argentina, then Mexico, then Peru, now Chile, so I have been moving around like a bit of a nomad. (FE-8) We have lived in a lot of different countries. (FE-5) So, I have lived in the US, China, and India, and then the Netherlands. (FE7)

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Resources that are accessed through networks are understood as social capital. Nahapiet and Goshal (1998) defined social capital as “the sum of the actual and potential resources embedded within, available through and derived from the network of relationships possessed by individual or social units” (p. 243). Entrepreneurs need substantial social capital to develop and grow their innovative startups, as most resources are acquired through their network. The case analysis identified three main types of social capital in this context: (i) global entrepreneurial social capital (e.g., accelerators and investors); (ii) global industrial social capital (e.g., suppliers or potential business customers); and (iii) global informal social capital (e.g., informal connections to helpful organizations and potential customers). First, the foreign participants of acceleration programs at Start-Up Chile often have a wide variety of personal relationships with global entrepreneurship-related actors. These actors can include successful startups, investors, universities, support organizations, experienced mentors, and well-connected business angels. For instance, FE-1 is originally from India and also lived in Dubai and Berlin, which allowed him to establish his entrepreneurial social capital on a global scale. He reflects, After that, I got a job in Dubai, an educational firm, so I moved back to Dubai. [ . . . ] I was going to all these networking events, and there is an incubator in Dubai called [anonymized], and then we [he and his cofounder] are placed there. [ . . . ] Then, we got into Dubai’s accelerator, called Turn8, where we got our initial seed fund, and we started the company over there. [ . . . ] So, once we decided “Okay, we can go further,” all of us [FE-1 and co-founders] quit our jobs, and we started working really hard on the company. At that time, we got into the accelerator called Hardware.co from Berlin. (FE-1) The case of FE-1 demonstrates how a young, motivated Indian entrepreneur proactively sought to expand his entrepreneurial networks in Dubai, a place that was completely new to him. FE-1’s network-seeking behavior lead him to find his current co-founders and to learn about different ecosystem actors in Dubai. Interestingly, FE-1 was not deeply rooted in the Dubai ecosystem and did not hesitate to expand his social capital to Germany. Not only FE-1 but also FE-11 and FE-13 had also participated in other accelerator programs worldwide, programs which helped them expand their global networks. The second type of global social capital is with industry, referring to global connections to industrial partners, such as suppliers or potential customers. One example is FE-6, a female Peruvian entrepreneur who developed organic food products. FE-6 mentioned several mentors in different places, one of whom was a food

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engineer in the US, where she briefly lived. She also had another mentor who is Peruvian and specialized in the distribution of food products: That day we made our first MVP [Minimal Viable Product], it was awful. “My god, it was too difficult to do, why did we start with this product and now it is something horrible and not simple.” So, we had to find mentors for product development and food technologies from the eco institute that is located in the US. They are really interested in supporting plant-based startups. (FE-6) Another story is FE-9, a female Brazilian entrepreneur developing a travel platform. Her story shows how startup communities become customers: So, I said, the Google Campus6 is a very living ecosystem, and they recommend a lot of clients. Actually, our first 20 clients were from the Google campus or a startup farm, our first accelerator. Probably, they were the first clients. Now the latest thousand are not, but the first 30, for sure. So, they recommended us to this huge client. (FE-9) Having connections to potential suppliers, distributors, and customers in different countries is critical, particularly for startups, as the latter have a steady growth orientation. For them, early internationalization is essential as a means to scale their business. The third type is informal global social capital. While the two types of social capital mentioned above are rather formal in nature, foreign entrepreneurs also have various informal connections in different countries. These connections can serve diverse functions and benefits for startup activities. For instance, The Brazilian entrepreneur FE-9 needed help with customer validation in Colombia, as she worked on an air travel platform for Latin America. She explained how the social network of a fellow participant helped her with this task: Once I went to have dinner with this other girl from another product. And it happened the same. Like she told me “Oh I have lots of friends in Colombia . . . like if you need. . . . ” And I said “Oh, I really want to go to phone them because it is the best market for air tickets. (FE-9) This example shows how such an informal network can generate unexpected benefits for startups. By attracting entrepreneurs from various countries, Start-Up Chile has created a sort of “melting pot” of informal global social capital, which provides program participants, as well as the accelerator, access to foreign markets. The importance of networks for entrepreneurs and their positive impact on entrepreneurial processes are widely recognized in research (e.g., Elfring & Hulsink, 2003). Entrepreneurship scholars generally see social capital as one of the most 6

Coworking spaces with organized by Google

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significant determinants of entrepreneurial opportunity recognition (Arenius & Clercq, 2005; Bhagavatula, Elfring, van Tilburg, & van de Bunt, 2010; RamosRodríguez, Medina-Garrido, Lorenzo-Gómez, & Ruiz-Navarro, 2010), the internationalization of entrepreneurial firms (Agndal, Chetty, & Wilson, 2008; Freiling & Zimmermann, 2014; Prashantham & Dhanaraj, 2010; Yli-Renko, Autio, & Tontti, 2002), and venture performance (Baron & Markman, 2000; Batjargal, 2003; Stam & Elfring, 2008). Despite the globalization of startup communities and the importance of social capital in this context, current literature offers surprisingly few insights about the role of global social capital in the context of entrepreneurial ecosystems and the way policymakers can mobilize this global social capital for the sake of regional development. Building social capital within the boundaries of one’s own ecosystem is more feasible than connecting to foreign actors because of spatial proximity (Helliwell, 1996, 2003). Scholars, therefore, differentiate between local social capital and social capital that has a global or international dimension (e.g., Arenius & Autio, 2002; Malecki, 2012; Autio, Sapienza, & Arenius, 2005). The case of StartUp Chile demonstrates the importance of acquiring global social capital through the attraction of foreign entrepreneurs. RP2: By incentivizing experienced foreign entrepreneurs from outside the ecosystem to move their location and remain in the ecosystem for a certain period of time, public accelerators gain initial access to different types of social capital, such as global entrepreneurial social capital (e.g., accelerators and investors), global industrial social capital (e.g., suppliers or potential business customers), and global informal social capital (e.g., informal connections to helpful organizations and potential customers). 5.2.3 Acquisition of Entrepreneurial Culture As introduced in Section 4.2.3, one of the strategic objectives of Start-Up Chile was to bring the entrepreneurial culture mindset to Chile by attracting foreign entrepreneurs. Foreign entrepreneurs who were incentivized to come to Chile brought two important culture-related gains. First, they were influenced by the entrepreneurial culture of other entrepreneurial ecosystems worldwide and exhibited a strong entrepreneurial mindset. Second, they became role models for potential startup entrepreneurs in Santiago, exhibiting their entrepreneurial mindset to the actors of the Santiago entrepreneurial ecosystem. To present the importance of an entrepreneurial mindset to the early evolution of the Santiago ecosystem, it is worth investigating Chilean society’s perception of startups’ entrepreneurial activities prior to the launch of Start-Up Chile. Several experienced interview partners who, each involved for more than a decade with growth-oriented entrepreneurship (VC-1, VC-2, EE-5, and EE-8) shared their

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view on the situation in Santiago before the initiation of Start-Up Chile. They pointed out that there were no shared beliefs and values in a dispersed, non-connected startup scene, which resulted in no public visibility of startup activities. It was no wonder that the vast majority of the students at the leading universities of Chile saw working for a large corporation as a desirable career path; becoming a startup entrepreneur was almost out of question. The early Start-Up Chile manager and now-investor VC-1 critically reflected how entrepreneurs were perceived at the time Start-Up Chile was initiated: At those times, an entrepreneur was a poor guy who is a jobless guy. (VC1) Other Chilean interview partners, such as VC-2, underlined this former public view on entrepreneurship: Entrepreneurship was . . . I would argue that the term was not even used. It did not have any connotation because it was not even used. So, the psyche or the mentality of Chileans has changed a lot towards entrepreneurship. (VC-2) CE-4, an organizer of Startup Weekend in Santiago, shared his feeling about the transformation of Chilean society’s perception of entrepreneurship: They see that it [entrepreneurship] is not just a profession, like being a journalist. It is a way of life. It changes everything in your life. How you are going to manage your family, manage whatever free time you can get, how to manage your social life, everything changes. You see that in your family, in your neighborhood, and more people are getting open to this idea of doing things in a different way [that is, opening to the idea of entrepreneurship]. And also, because there is no specific entry age to the startup world, you can be 50, and get out of your job and start your own company and its good. So, it is growing very rapidly how people have a good perception of startups. (CE-4) One example in which the previous lack of an entrepreneurial mindset in Chilean society is apparent is the fact that failing was considered to be negative. However, foreign entrepreneurs who participated in Start-Up Chile changed the meaning of failure in the context of entrepreneurship. They learned in other entrepreneurial ecosystems worldwide that failure brings an entrepreneur one step closer to a solution. In the startup community, this way of thinking emerged from methodologies such as Lean Startup and is commonly termed “fail-fast-culture” (Müller & Thoring, 2012), an idea that was new to the Santiago ecosystem and its entrepreneurs. Brazilian Start-Up Chile participant FE-9 described the roots of her mindset regarding failure as follows: We applied for an accelerator in Brazil. The most famous one [ . . . ] And they have this fail-fast way of thinking that worked as we went to the markets, failed, and we tried with bars instead of movies, failed. And then we

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tried with restaurants, failed, tried with adventure parks, failed. Okay. That . . . there is this one market we were avoiding because it is too big, too concentrated, and you are never going to have a chance in there. Like, all in. That was our last chance. We went to our tickets, and it worked. It was like . . . it was the best thing we did, and the best thing actually was that they told us to destroy our platform. So, we destroyed our platform and made like a shitty landing page . . . very, very . . . like I would think it was a fraud because our prices were like 75% discounted. And the page was very ugly. So, if I was a client, I would never buy that. But somehow people did buy. It worked. (FE-9) This quote from FE-13 shows how her past entrepreneurial experiences shaped her view on the importance of experimenting and failing in the business development process. This accords with entrepreneurship literature, which generally notes the importance of entrepreneurial failures to the eventual success of ventures (Freiling & Wessels, 2010; Singh, Corner, & Pavlovich, 2007; Yamakawa, Park, Peng, & Deeds, 2015). Her entrepreneurial mindset was not built on simply following a general trend but instead was deeply rooted in own experiences with her previous startup. Second, foreign entrepreneurs not only introduced their entrepreneurial mindsets to the Santiago ecosystem, but also became accessible entrepreneurial role models for local Chilean entrepreneurs. Start-Up Chile has introduced new entrepreneurial behaviors, beliefs, and norms from foreign entrepreneurs to the Santiago entrepreneurial ecosystem of foreign entrepreneurs, which created a new type of entrepreneurial role model. These foreign entrepreneurs demonstrated attributes distinctive to startup entrepreneurs, such as an achievement motivation and a robust locus of control. They embraced collaboration and mutual help and valued every opportunity to learn something new. This was reflected in spontaneous startup-related discussions in the kitchen area of the coworking space, in ad hoc coaching observed between entrepreneurs, or in the initiation of informal workshops by participants on topics with which other entrepreneurs struggled. Interestingly, experienced entrepreneurs from outside Chile shared a common norm and mindset, despite their diverse cultural backgrounds. While foreign entrepreneurs are influenced by the distinct entrepreneurial culture of their home entrepreneurial ecosystems, they also share many mindset characteristics with other foreign entrepreneurs. In this regard, the foreign entrepreneur FE-6 noted that Because we are entrepreneurs, I think we are all really similar in the mindset. We want to go globally, yes, we really have like a global mindset. (FE6) There appears to be a shared international entrepreneurial culture among foreign entrepreneurs. Interview partners referred to their common motivation to

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experiment and learn, to collaborate and mutual help, to engage in calculated risktaking, to tolerate failure, and to maintain a growth orientation towards international markets. These common cultural features expressed by the foreign entrepreneurs accord with other research on entrepreneurial cultures, such as the proposed dimensions from Dimitratos and Plakoyiannaki (2003), who conceptualized international entrepreneurial culture in terms of the six dimensions international market orientation, learning orientation, innovation propensity, risk attitude, networking orientation, and motivation. By bringing foreign entrepreneurs to the Santiago ecosystem, Start-Up Chile introduced their mindset and entrepreneurial culture to the ecosystem. This is important, as nascent entrepreneurial ecosystems are characterized by very few interconnected, like-minded, innovative, and growth-oriented entrepreneurs, which can result in the public notion that entrepreneurship is for entrepreneurs who cannot secure stable employment (Brown & Mason, 2017). Bright foreign entrepreneurs with strong academic backgrounds who are entirely opportunity-driven present a different picture, representing an entrepreneurial culture from successful foreign entrepreneurial ecosystems. A shared entrepreneurial culture that is expressed in common values and beliefs is important to strengthen coherence among ecosystem actors, which is important for the emergence and resilience of entrepreneurial ecosystems (Roundy et al., 2018, 2017). RP3: By incentivizing foreign startups to relocate to the local entrepreneurial ecosystem, public accelerators can mobilize foreign entrepreneurs to be the disseminators of an entrepreneurial mindset within the local ecosystem and to be entrepreneurial role models who help create a shared entrepreneurial culture. 5.2.4 Summary of Acquiring Resources from Outside the Ecosystem Section 5.2 developed three research propositions with regard to the acquisition of resources from outside the ecosystem. The single case study with Start-Up Chile in the Santiago entrepreneurial ecosystem demonstrates that the public accelerator gained access to explicit and tacit knowledge (e.g., entrepreneurial know-how), global social capital, and entrepreneurial mindset of experienced foreign entrepreneurs by incentivizing them to move to Santiago and spend time within the ecosystem for a certain period of time. Figure 22 visualizes three research propositions developed in Section 5.2, and lists all of them.

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Step 1: Resource Acquisition Foreign entrepreneurial ecosystem

RP 1

Foreign entrepreneurial ecosystem

RP 2

1 Entrepreneurial Ecosystem Public Accelerator

RP 3

Participants

Resource flow

Research Propositions RP1: By incentivizing experienced foreign entrepreneurs from outside the ecosystem to move their location and stay within the ecosystem for a certain period of time, public accelerators gain initial access to valuable knowledge, such as industry-specific knowledge, knowledge on the use of advanced technologies, global market knowledge, and knowledge on entrepreneurial processes. RP2: By incentivizing experienced foreign entrepreneurs from outside the ecosystem to move their location and remain in the ecosystem for a certain period of time, public accelerators gain initial access to different types of social capital, such as global entrepreneurial social capital (e.g., accelerators and investors), global industrial social capital (e.g., suppliers or potential business customers), and global informal social capital (e.g., informal connections to helpful organizations and potential customers).

Foreign entrepreneurial ecosystem

Section 5.2.1

5.2.2

142 RP3: By incentivizing foreign startups to relocate to the local entrepreneurial ecosystem, public accelerators can mobilize foreign entrepreneurs to be the disseminators of an entrepreneurial mindset within the local ecosystem and to be entrepreneurial role models who help create a shared entrepreneurial culture.

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Figure 22: Summary of Acquiring Resources from Outside the Ecosystem

5.3 Integrating and Accumulating Acquired Resources in the Accelerator The acquisition of foreign resources is certainly a critical step in the emergence of a nascent entrepreneurial ecosystem. However, incentivizing entrepreneurs from abroad to relocate to the ecosystem for a certain period of time is only the first step. Before Start-Up Chile can utilize these acquired resources, they must first process, integrate, and develop the acquired resources within the accelerator (Figure 23). What makes the resource integration and accumulation processes of Start-Up Chile unique is its organizational form. As discussed in Section 2.2.3.1, accelerators have distinctive organizational boundaries as well as periodically changing cohorts of participants (Cohen & Hochberg, 2014). While a conventional organization has a rather clearly defined organizational scope and boundaries as a firm, the program participants of accelerators are only part of the organization temporarily. This continually changing idiosyncratic organizational structure of accelerators poses a challenge to the staff of Start-Up Chile regarding the integration and accumulation of the resources that foreign entrepreneurs possess. This study identified four main mechanisms to integrate the acquired resources in a public accelerator’s organization (Figure 24). i) First, the accelerator builds an inclusive, stable, and reliable community with a common identity. The community spirit and close connection among members of the accelerator was especially visible in mutual ad hoc help, get-togethers after work, and joint activities on the weekends. ii) Second, the accelerator takes advantage of the entrepreneurial culture of the participants and merges it into one community-level culture. iii) Third, the accelerator creates formal knowledge-sharing mechanisms and facilitates informal knowledge transfer between participants within the accelerator community. iv) Fourth, every mechanism is directly or indirectly shaped and facilitated by the accelerator staff, which results in knowledge accumulation and overall organizational learning.

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The following sections present pieces of empirical evidence and position them in relation to literature to develop a set of research propositions. First-Order Categories • • • • •

Social media connections before the program starts Introductory week with social events Events to get to know startups of peers Let everyone share problems and challenges Close interaction creates feeling of being family

Second-Order Categories

Aggregated Dimensions

Creation of shared values and a common identity

Section 5.3.1

• Mix participants in activities during introductory week • Reinforce connections during the whole program • Facilitate private group activities of participants

Intra-program connections

Accelerator community building

• Create venues for participants to meet alumni • Small events with participants of all programs • Buddy program to help new participants integrate

Inter-program connections

Section 5.3.2 • Emphasize mutual support culture from inception • Facilitate cultural exposure • Use experienced founders as role models • Participants learn from the start that helping each other provides mutual benefit • Inexperienced copy more experienced founders • Encourage participants to replicate strong entrepreneurial mindsets

• Periodic formal peer-to-peer feedback sessions • Interactive workshops and pitch trainings • Peer-to-peer mentoring • • • • •

Staff connects participants that can help each other Co-working space facilitates random encounters Co-working space facilitates emergency help of peers Co-working space facilitates informal workshops Co-working space facilitates informal periodic help session from experienced participants

Enhance perceivability of entrepreneurial mindsets Merging individual mindsets into community-level culture

Building a communitylevel entrepreneurial culture

Section 5.3.3 Coordinating formal knowledge sharing within the community

Facilitating informal knowledge sharing within the community

Knowledge sharing mechanism

Section 5.3.4 • Staff learns from individual startup support • Intensive periodic one-on-one conversations with participants • Staff learns from mutual startup feedback in platoons • Observation data of staff • Staff tracks progress of participants electronically • Staff builds participant database

Staff’s individual level of learning

Systematic approaches to accumulate organ. knowledge

Organizational learning and knowledge accumulation

Figure 23: Data Structure of Integrating and Accumulating Acquired Resources in the Accelerator

The empirical case shows strong indications for the importance of the community within Start-Up Chile. The accelerator community was the foundation and driver of all internal resource integration and accumulation processes, as its core was a common value of mutual help and collaboration among participants.

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Consequently, Start-Up Chile placed its first strategic focus when a new program cohort arrived on community-building. The Start-Up Chile community was developed in three ways: (i) by creating shared values and a common identity, (ii) by creating close intra-program connections among participants who attend the same program, (iii) and by creating inter-program connections among participants of different acceleration programs. Accelerator Organizational level (accelerator)

Knowledge

RP7b accumulation

RP5a-b RP6b

Community RP4a-c

Informal knowledge sharing

RP7a

Formal knowledge sharing

Staffs individual learning

RP6a

Figure 24: Resource Integration Mechanisms

5.3.1 Community Building Literature suggests that a community is created around shared values and a collective identity, which provides its members with a mutual sense of community (Mcmillan & Chavis, 1986). At Start-Up Chile, these important community cornerstones are formed with the help of numerous events, which were held especially at the beginning of the program. The evolving shared sense of community was articulated by several participants, such as CE-2 and FE-10, who compared the community to a family: The strength [of Start-Up Chile] is, I would say, the Community, I mean the capacity they have to put people together and work together and feel part of the family. (CE-2)

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I mean, the formation of a family takes place like within just three or four weeks. It is like we are all just one big massive family. (FE-10) This familiar feeling creates a safe environment in which individuals perceive close interaction and mutual support more favorably than competition. Literature addresses the importance of this safe environment for collaboration within accelerators (e.g., Radojevich-Kelley & Hoffman 2012). The community is strengthened by the forging of connections among participants of the same program cohort, and it is then broadened by the creation connections with participants of different program cohorts. Each program cohort comprises a sub-community within the overall accelerator community, and all the sub-communities are connected, as they are at similar stages in their startup development, having begun the program on the same day and participated in numerous team-building activities (Cohen, 2013). 5.3.1.1 Creating Shared Values and a Common Identity The creation of shared values and a collective identity consists of five steps (Figure 23). First, social media groups were formed to link participants before the program started. Second, Start-Up Chile organized an orientation week, with social events for newcomers. Third, Start-Up Chile organized a variety of business-related events with the aim to let participants become acquainted with other startups. Fourth, these events allow startups to share their problems and challenges. Fifth, the creation of a common feeling contributed to the development of strong bonding that participants describe as family. FE-7, who had just arrived from Brazil and begun the program one month prior to the interview, spoke on the creation of shared value via social media prior to the program: Before the program, we started a Facebook group. [ . . . ] We had a Facebook group, we had a WhatsApp group that was already working. (FE-7) This first exchange of information served primarily introductory purposes. Nevertheless, participants already began to help each other regarding administrative work before entering the program. While the literature on entrepreneurial support has addressed the networking behavior and relations among entrepreneurs who participate support programs (Ebbers, 2014; Scillitoe & Chakrabarti, 2010), it is still largely unknown how accelerators strategically coordinate community building among program participants before the program starts with the help of social media. Literature suggests that collaboration and mutual learning can be cornerstones of new online communities (Gunawardena, Hermans, Sanchez, Bohley, & Tuttle, 2009). Research furthermore suggests that virtual communities can be integrated into offline communities and that the latter can extend the former

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(Wellman, Boase, & Wenhong, 2002). In the case of Start-Up Chile, the participants’ online communities remained highly active even after an offline community was established. After the program began, Start-Up Chile made extensive efforts to build a community among participants from the beginning of the acceleration program. At a welcome ceremony for newcomers, the participants, from all around the world, assembled in a theater, where the staff informed them about the program and common rules. More importantly, former participants entered the stage and explained their journey and how the community helped them. These fellow entrepreneurs created an initial sense of community for participants by sharing their first-hand experiences. FE-4, a female American entrepreneur, recalled the first day of the TSF program: So, we had an intro day, which was like a series of activities, and it kind of helps you become a small community. (FE-4) After the welcome ceremony, several community-building events are initiated. Participants form groups and explore the city; they work together on team building tasks and jointly go for pub crawls. These ice-breaking events introduce them to the social side of Start-Up Chile and foster private interactions, allowing them to become personally acquainted. Chilean entrepreneur CE-2, who had just completed his program, stated, Ice-breaking meetings in like the bars were very good because it was the best way to interact like in a more chilled way and not always like the business way. (CE-2) In these events, participants could become acquainted in an informal setting. Scholars suggest that ties and trust among network participants can be enhanced through informal interactions (Romzek, Leroux, & Blackmar, 2012). One notable aspect of the Start-Up Chile’s efforts in community building is the mixture of informal social activities and formal business-related events. Start-Up Chile created an appropriate balance between these two types of events to offer diverse settings for interaction. Start-Up Chile also actively encourages participants to exchange startup stories through the early-stage attendance at an elevator pitch event, in which participants present their businesses in front of others. The author could observe that some Chilean participants were surprised by the way entrepreneurs shared their ideas at such an early stage and felt a little uncomfortable. It was particularly important for these participants to step out of their comfort zone, which helped them to create a common identity and recognize that they are not competitors but collaborators, who are all in the same boat. An American entrepreneur, FE-13, mentioned the discovery of common challenges: At that time, it was very good, because we realized there are lots of people in the same situation as ours. (FE-13)

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Sharing common problems and challenges in their entrepreneurial endeavors was an integral condition to build bonding among program participants, because they could reassure that they should pursue their entrepreneurial goals together. By sharing challenges, entrepreneurs can release their psychological burdens and receive advice with possible solutions. By hearing others’ problems, entrepreneurs realize that they are not the only ones who continuously face challenges, which allows them to maintain and grow their entrepreneurial motivation (Kacperczyk, 2013; Nanda & Sørensen, 2010). FE-12, a male South-African entrepreneur who decided to stay after his program at Start-Up Chile, reported, As you can see, it is up and down, and you think like are we doing something different or wrong. And then, you see like lots of businesses have the same thing, so that was a little bit reassuring, you know that you were not the only one who has these struggles. (FE-12) These formal and informal activities foster the creation of shared values, and a common identity is supported by natural group dynamics that help to speed up the formation of close ties (Mcmillan & Chavis, 1986). The roles of such formal and informal community-building events in accelerators are largely unknown, although these activities are commonly organized for participants. This mixture of business and social events is essential to maintain and grow the community. This study observed a virtuous circle in which formal events, such as pitch events and platoons, encourage both foreign and Chilean entrepreneurs to share their ideas and challenges, and informal events allow them to discuss these topics in diverse settings and to offer mutual emotional support. Research on the interplay of formal and informal networks found that informal community structures enhance the effectiveness of formal collaboration and knowledge sharing (Allen, James, & Gamlen, 2007). Many participants used the notion of family to describe the nature of communities emerging among accelerator participants, which shows the strength of bonding among community members. One possible explanation for the closeness of their ties is that foreign entrepreneurs often do not have any social ties in Chile. All their family, friends, and networks are abroad, so they actively seek new relationships. Former Start-Up Chile manager EE-7 used the analogy of exchange students: That was the same thing that happens to students in exchange. When you are going out of your environment, and you go on student exchange in a foreign country, and you are going to Start-Up Chile, you do not have family and friends, so you proactively seek to meet new people. (EE-7) This common feeling of being part of a family indicates that the community has a strongly informal nature and that people are connected through emotional ties. It shows a high level of trust and collective identity, which are signs of strong communities (Mcmillan & Chavis, 1986).

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The way Start-Up Chile organized formal and informal events and emphasized the development of communities among participants was essential, because participants could create shared value, trust, and a collective identity. Having shared values and trust is commonly believed to be critical for collaborative work and knowledge transfer, especially in organizations that temporarily create structures for knowledge transfer (Ajmal & Koskinen, 2008). The formation of a common identity and the creation of shared values are therefore the foundation on which participants’ resources can be integrated into the accelerator. A safe environment, trust, and a sense of belonging are necessary for the participants to open up and share knowledge and contacts. RP4a: Public accelerators integrate and accumulate acquired resources into the organization by facilitating diverse community-building measures, such as the formation of social media groups and the organization of formal and informal events, to create a family-like community whose members share values, trust, and identity. 5.3.1.2 Creating Close Connections Between Participants Inside Their Program This study observed that Start-Up Chile applied two different methods of connecting participants: intra-program and inter-program connections. This section presents the former type. Start-Up Chile made substantial efforts to form connections among program participants of the same program cohort. As introduced in the previous section, Start-Up Chile encouraged its program participants to form a pre-community via social media, which turned into a real community during orientation week. During the introduction day, Start-Up Chile staff formed different groups to guarantee numerous and deep interactions among participants in the same program. By doing so, people naturally connect themselves to their fellow participants, and, as the British FE-5 noted, That was actually very good. Start-Up Chile did a really good job with that [i.e., connecting participants of the same program], because we have, maybe you know, we have like a big welcome day where we will run around town and do activities and stuff, and that was very good because they force you to mix in with other people. (FE-5) This effort on the part of Start-Up Chile is critical, mainly because it provides large-scale programs in which more than 100 participants participate. The staff also organize activities throughout the program, such as small events or bar nights, to create opportunities to build new connections and reinforce existing ones. Accelerator manager EE-4, who referred to the community as the main asset of StartUp Chile, explained,

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One of the main assets of Start-Up Chile is something that we are not like delivering [ourselves] . . . that is the community itself, right? We are doing all of the activities for them to be in touch always. (EE-4) Holding regular events and get-togethers enables entrepreneurs to reinforce their bonds and connections with peers in their cohort, thereby strengthening the sense of community within the program. While Start-Up Chile initiated numerous events, program participants, especially foreign entrepreneurs, natural organized social activities on their own as well, using every opportunity to deepen the connections they had forged through accelerator activities. They invited each other to small home parties or went to lunch or dinner in larger groups with entrepreneurs in the same cohort. The author also observed that there were tables and chairs in front of the coworking space, in which groups of program participants sat together. This setting made it almost impossible for entrepreneurs to go home after work without being invited for a drink. All these opportunities to mingle facilitated many connections. FE-5 reported, And the social side has been very good. There were a lot of social events to meet people, and we know the names of pretty much all the 100 people in the program now, all [from] different countries and Facebook friends. And I think those will turn into long term relationships, and we have made a couple of very strong relationships. (FE-5) Each program cohort has its own community, built on connections among participants. Mcmillan and Chavis (1986) suggested that important factors for building a functioning community are clearly definable membership criteria that indicate the boundaries of the community. The more similarity there is among members, the more sense of belonging, confidence, and emotional safety. The fact that all participants in each cohort start the acceleration program at the same time creates an obvious criterion for community membership, strengthening the connections within the community. This leads to enhanced knowledge sharing among members (Ruuska & Vartiainen, 2005). Emery and Flora (2006) found that growing stocks and flows of social capital lead to enhanced capacity building of community members. Thus, the increased connection and interaction of community members increase their ability to acquire new knowledge from each other. The close connections within this community of cohort participants at Start-Up Chile are constantly reinforced and deepened by several formal and informal activities, such as workshops or events, which are a defining characteristic of accelerators (Cohen, Fehder, Hochberg, & Murray, 2019). They provide the underlying structure for resource sharing and integration (Pauwels et al., 2016; Ruuska & Vartiainen, 2005). RP4b: Public accelerators integrate and accumulate acquired resources by building an intra-program community within the accelerator through the creation of connections among participants in the same program.

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5.3.1.3 Creating Connections Among Participants of Different Programs Start-Up Chile created not only connections among participants within their programs but also connections among participants of different current and former programs. First, Start-Up Chile created venues for current and former participants to meet. Second, it organized small events to which participants from all programs were invited. Third, it coordinated a so-called buddy program, in which participants of a program that started earlier help the newcomers upon their arrival. Start-Up Chile has three parallel programs, with participants at different stages of startup development (Section 4.2). All these entrepreneurs have strong connections within their own program, as discussed above (Section 5.3.1.2). Start-Up Chile actively builds connections among participants in different programs to create opportunities for resource transfers and mutual resource creation on a larger scale. These inter-program connections develop a sense of an overall Start-Up Chile community, which includes alumni all around the world. This makes it easy for current participants to connect with alumni and vice versa. First, Start-Up Chile created occasions for previous and current participants to meet one another. One example was provided by FE-1, an Indian entrepreneur currently based in Dubai. He is an alumnus of Start-Up Chile and visited Santiago to meet old friends and spend time at the coworking space to reinforce his connections. Start-Up Chile also proactively connected former and current participants by establishing mentor-mentee relationships with them. For instance, the staff connected FE-4, who had just arrived in Chile to attend the TSF program at the time of the interview, to a French alumnus, who started mentoring her on a regular basis. In addition to such a mentoring program, Start-Up Chile also periodically organizes alumni dinners. Alumnus FE-12, from South Africa, who stayed in Santiago after the program, explained, We went to a few of the alumni dinners and what that does . . . all of those I think will be very valuable, very enjoyable, but also, it is a game like having access to people that know things and other people that can help you get things, that made some pretty good connections at the last alumni dinner, so that was very helpful as well. (FE-12) The connections between alumni and current participants were not limited to face to face; connections also occurred via social network groups, many of which were initiated by Start-Up Chile. Alumnus FE-2, from Romania, explained, Yeah, we have a group on Facebook. That is not only for each generation, but it is a global one, and, yeah, it is a huge network. (FE-2) This network operates independently of Start-Up Chile’s staff and offers plenty of opportunities to build new relationships based on mutual help or knowledge exchange. Young Chilean participant CE-1 listed an example in this regard:

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Yes, I do not know if it is the first generation of the year of the seed program or last year’s; it was a Brazilian guy working [on] something very similar to ours, and we have like a Skype call next week. (CE-1) Second, Start-Up Chile brought together current participants from different acceleration programs. Although these connections to alumni outside of Chile are valuable, the network of current Start-Up Chile participants is strong and intensive, as seen in several instances in which participants from different programs met at the coworking space and picked up the thread of a prior conversation about startuprelated challenges. Start-Up Chile regularly created opportunities for participants from different programs to mingle. Every Friday, for instance, they had lunch together on the rooftop of the coworking space, with groups of participants of the same nationality preparing food from their country. Staff and participants used the relaxing atmosphere at the end of the workweek to deepen their relationships. Additionally, there were plenty of private parties during the weekends, in which different program cohorts became acquainted. FE-6, a Peruvian entrepreneur, had recently joined the TSF program when she was interviewed: Also, like every week, we have a meeting at a house; first was the house of [the] Brazilians. Like Brazilian night, this Saturday, it will be like the Indian night, with Indian food. (FE-6) Third, Start-Up Chile had a buddy program, in which older participants help newcomers, often representing the first inter-program connections that were established for the newcomers. These play an important role in the renewal process of the overall Start-Up Chile community that happens every time new participants arrive. All these formal and informal interactions among the different programs help form a community of participants spanning all programs, including alumni. The literature on the design of accelerators assumes that there is only one cohort of participants at a time (Cohen et al., 2019; Pauwels et al., 2016), with the next cohort entering the acceleration program only after the previous cohort has left. With this structure, it is challenging for conventional accelerators to develop intergenerational relationships. Start-Up Chile, however, managed to create and maintain not only these intergenerational relationships but also inter-program connections. It has three different acceleration programs running simultaneously, each focusing on a different startup stage: Cohorts include startups in the idea phase, startups that have just introduced their product to the market, and startups that are trying to scale up their business. Herriot and Pemberton (1995) proposed that organizations gain competitive advantage through diversity, which increases the potential for organizational learning. They describe diversity as a critical attribute that facilitates creativity and learning. This suggests that the diversity of participant backgrounds from the

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different programs at Start-Up Chile has the potential to create more opportunities for mutual learning and knowledge sharing. This overall Start-Up Chile community, with links between different programs, is an important foundation on which the acquired resources are integrated into the accelerator. RP4c: Public accelerators integrate and accumulate acquired resources by building an accelerator community through the creation of connections between participants of different cohorts, and accelerator programs through mentor-mentee relationships, mutual events, and buddy programs. 5.3.2 Building a Community-Level Entrepreneurial Culture Foreign participants bring an entrepreneurial mindset into the Santiago ecosystem, as suggested in RP3 (Section 5.2.3). Literature defines an entrepreneurial mindset as “the ability to be dynamic, flexible, and self-regulating in one’s cognitions given dynamic and uncertain task environments” (Haynie, Shepherd, Mosakowski, & Earley, 2010, p. 218). It refers to a set of entrepreneurial assumptions and values, such as the motivation and capacity to learn continuously, tolerance towards failure and risks, or strong growth orientation with international ambitions. Start-Up Chile deliberately attempts to integrate individuals’ entrepreneurial mindset into the culture of the accelerator community. The following sections explain how a community-level entrepreneurial culture is developed at Start-Up Chile based on the empirical data. First, Start-Up Chile emphasizes individuals’ entrepreneurial mindsets and ensures that they are visible to other participants. Second, Start-Up Chile then encourages participant interaction that helps to merge their diverse backgrounds regarding entrepreneurial culture into one community-level entrepreneurial culture by facilitating collaboration and exchanges of help, feedback, and learning. 5.3.2.1 Enhancing the Perceivability of Participants’ Entrepreneurial Mindset The empirical data of the case revealed how foreign entrepreneurs expressed their entrepreneurial mindset in front of other participants of their cohorts. Apart from facilitating informal interactions among participants within the coworking space, Start-Up Chile created formal structures, such as the so-called Platoon, in which the entrepreneurial mindset of different participants is shared and reflected within a group. An entrepreneurial mindset is invisible as long as individuals do not have a chance to express it in front of others. To integrate a mindset into the communitylevel culture, an entrepreneurial mindset should thus first be made visible to other participants.

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The first mechanism of accomplishing this is direct interaction among participants, especially in the form of peer feedback. Platoons are periodic reflection and feedback sessions held with fixed groups of a dozen startups. These sessions are led by Start-Up Chile staff and belong to the essential parts of the acceleration program. During the sessions, Start-Up Chile staff encourage participants to provide mutual feedback, which naturally makes individuals’ entrepreneurial mindset visible. Alumnus FE-2 described these sessions as opportunities to help each other: Yeah, yeah, the Platoons. We met once a week, and we talked about the struggles; we had a theme for each week, and we talked about everybody’s struggles, and it was pretty interesting that we got help from each other. (FE-2) During platoons, participants witness how others react toward the failure of other participants, how they permanently improve their businesses with strong learning capacities, and how their entrepreneurial mindset backgrounds guide them in the right direction. The verbal expression of their entrepreneurial mindsets in their feedback evoked self-reflection on the part of the participants regarding their mindset, assumptions, and attitude toward entrepreneurial endeavors. Alumnus FE-12, from South Africa, explained what had the most significant positive impact on him during the program: I think the experience of seeing a hundred businesses over six months is quite something, you know, like how people change the businesses in that six months and you see people like rising and falling and all that and just that intensity like makes you think about running a business in a different way. (FE-12) Seeing the successes and failures of other startups made FE-12 reflect on his own entrepreneurial mindset and reconsider how he runs his startup. Seeing that all participants faced non-linear startup development with multiple challenges helped him develop resilience and respond appropriately to unexpected situations. Building entrepreneurial resilience into their mindsets is crucial for entrepreneurs to grow their business under challenging circumstances, and learning to copy the behaviors of resilient entrepreneurs is one way to do so (Bullough & Renko, 2013). Several foreign interviewees observed significant differences between Chilean and foreign entrepreneurs at Start-Up Chile with regard to entrepreneurial mindsets: Some Chilean entrepreneurs are not yet out of the comfort zone. (FE-9) But I mean there are lots of cultural things about Chileans that they are very conservative, very closed-minded; they are very shy and less outgoing than other Latin American nationalities. And I certainly found that to be true. Especially, it was just many times that was pulling teeth, trying to get the Chileans to come to the activities. (FE-7)

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When interacting with entrepreneurs from more advanced entrepreneurial ecosystems, Chilean entrepreneurs quickly noticed differences in how entrepreneurs cope with challenges. They also learned about the challenges that entrepreneurs face in other entrepreneurial ecosystems. The types of challenges that entrepreneurs can face differ greatly depending on the nature and evolutionary stage of entrepreneurial ecosystems. For instance, Brown and Mason (2017) described how entrepreneurs of nascent ecosystems tend to rely on government safety nets, while more advanced entrepreneurial ecosystems, in turn, have both more resources and qualified startups, which leads to fierce competition among entrepreneurs. By learning about such challenges of entrepreneurs from more competitive environments, Chilean entrepreneurs increase their competitiveness. A Colombian TSF participant described the situation as follows: I think when you live in New York, which is such an environment of competitiveness and it is very, very intensive, you learn not to be afraid of much and like just throw yourself up in the air and not. . . . I do not think I fear to fail. I am very passionate about what I do, so as I said earlier, like if I fail, it is nothing that I feel like I really lose. It is more maybe the time. But many of the people who are in the program, it is their first time starting a company, and you see them much more cautious taking more like weighing their decisions more and not going out and kind of like testing it. Being afraid of, you know, like people say ‘No, I do not want this because that proves the whole theory wrong. (FE-3) This learning process was not limited to Chilean entrepreneurs. By witnessing and discussing the entrepreneurial journeys of other entrepreneurs, participants began to develop their mindsets based on approaches from other entrepreneurs. Start-Up Chile alumnus FE-12 noted, I think we had a very naïve way of looking at how we are going to be successful and achieve what we wanted to achieve . . . any kind of learning that you have to change, and that the people that can change make the most changes are the ones that survive. I think that was a useful lesson. (FE-12) This quote shows how FE-12 changed his mindset towards becoming more adaptable to uncertain conditions by analyzing how other entrepreneurs used their adaptability to become more successful. The literature on entrepreneurial mindsets generally stresses the importance for entrepreneurs of adaptable cognition to cope with uncertainty (Haynie et al., 2010; Haynie, Shepherd, & Patzelt, 2012; Ireland, Hitt, & Sirmon, 2003). It is important to demonstrate to participants the differences in individuals’ entrepreneurial mindsets, because otherwise, these mindsets remain less visible and are not clearly expressed or perceived. Making entrepreneurial mindsets visible, explicit, and perceivable is a prerequisite to integrate mindset into the communitylevel culture. This phenomenon is reflected in the literature. For instance, Haynie

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et al. (2010) investigated the interrelationship between managers’ entrepreneurial mindsets and organizational culture. They developed the notion of entrepreneurial spirals, which consists of enduring and deviation-amplifying loops to explain mutual influences between individual psychological factors and cultures within organizations. The literature also suggests that the first step to creating a common culture after the merger of two companies must be the creation of a deeper understanding and respect for each other’s differences, as this builds trust and enhances the effectiveness of communication (Giffords & Dina, 2003). This argument supports the importance of Start-Up Chile’s efforts to allow participants to articulate and express their entrepreneurial mindsets, as this can serve as a starting point for the development of a shared organizational or community-level culture, which supports learning and competence-building and the effective integration of participants’ resources into the accelerator’s organizational processes (Denison & Mishra, 1995; Freiling & Fichtner, 2010). RP5a: Public accelerators integrate and accumulate acquired resources by making the entrepreneurial mindset of participants visible, explicit, and more perceivable, which creates the foundation of a community-level culture. 5.3.2.2 Merging Individual Entrepreneurial Mindsets into a Community-Level Culture Start-Up Chile’s first enhanced the visibility of the entrepreneurial mindset of particularly foreign entrepreneurs. The second step is encouraging participants to learn from the mindsets of their peers in order to merge individual-level entrepreneurial values and assumptions into one shared community-level culture. This process is driven in two ways: by making participants realize the value of mutual help and by encouraging participants to develop an entrepreneurial mindset. These lead to the harmonization of entrepreneurial cultures on the community level. First, Start-Up Chile encourages participants to help each other whenever possible, especially during the first weeks upon arrival. In this way, participants learn to value the help of their peers from the beginning. They realize that other participants are not competitors but collaborative peers with whom to pursue the same goal. Mutual support is one cornerstone of the shared community-level culture at Start-Up Chile. An ATSF participant from the US reflected, I think it maybe goes back to like the community aspect like it just feels like we are all in this. Like the point of us being here is kind of to help each other. Yeah. I kind of get that from people in Seed and also here. (FE-4) The author observed that Start-Up Chile values mutual help as an integral part of the community culture, since it explicitly addressed this notion on various

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occasions, ranging from the activities in the welcome week to discussion in platoons and workshops. Second, after being integrated into activities of mutual help and collaboration, participants began to replicate these approaches and other elements of the entrepreneurial mindset of their peers from more advanced entrepreneurial ecosystems, which gradually led to the emergence of a shared entrepreneurial culture on the community level. When talking about how Start-Up Chile facilitates the development of a community-level culture, FE-9 described how We have to talk to different people, when we have lunch for different people, something like this. Once you do it the first time, the other will replicate. So, it is more about for us to get used to it. (FE-9) The unique community-level entrepreneurial culture that emerges through diverse interactions among participants with different entrepreneurial cultural backgrounds is the glue that binds the community together. This entrepreneurial culture formed the basis for a temporal organizational culture in Start-Up Chile. Temporal organizational culture is essential for the knowledge-sharing mechanism of accelerators due to the temporality of their organizational nature, as discussed in Section 2.2.3.1. Ajmal and Koskinen (2008) suggested that individuals who work in time-limited organizational contexts must merge their professional cultures, such as entrepreneurial culture, into one organizational culture to strengthen the creation, sharing, managing, and use of knowledge. Accelerator literature also supports the importance of mutual support from program participants. Pauwels et al. (2016) identify a supportive peer-to-peer environment and shared entrepreneurial culture as one distinguishing factor of accelerators from incubators. These shared beliefs, values, and behaviors, such as the celebration of mutual experimentation, learning, or collaboration, serve as a foundation for resource integration processes (Ajmal & Koskinen, 2008; Denison & Mishra, 1995). RP5b: Public accelerators integrate and accumulate acquired resources by encouraging diverse participant interactions that merge individuallevel entrepreneurial mindsets into an accelerator community culture. 5.3.3 Facilitating Knowledge Sharing Start-Up Chile attracts entrepreneurs from various backgrounds and with unique knowledge, as discussed in Section 5.2. Knowledge about customer problems, technology, and the potential of innovation increases the ability of entrepreneurs to discover and exploit opportunities (Wiklund & Shepherd, 2003). Consequently, knowledge sharing through feedback or collaborative work is one of the most valuable benefits accrued by participants who take part in the accelerator program. Literature suggests that the scope and intensity of knowledge sharing and mutual learning are considerably enhanced by a community-level culture

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based on trust and shared values (Dhanaraj, Lyles, Steensma, & Tihanyi, 2004; Freiling & Fichtner, 2010). Start-Up Chile actively coordinates knowledge sharing among accelerator stakeholders. For instance, it encourages intensive interaction among participants, wherein they could discuss and solve the actual problems faced by their startups together, with their peers. By doing so, participants collaboratively develop solutions while applying their unique tacit knowledge. One instance was observed in which FE-8 helped a young entrepreneur who struggled to get appointments with potential customers. FE-8 stepped in and explained how she struggled to acquire her first client after being recruited to help a foreign startup enter the South American market. She then suggested certain tricks that were helpful for her in acquiring her first contacts and setting up meetings with potential customers despite being an unknown company. They then discussed where and how these tricks could be implemented into the sales funnel of the young entrepreneur. Generally, entrepreneurs proactively search for opportunities to give feedback or to help each other. One possible reason for this behavior is that they received support from others in the past and that they are often aware of the fact that they can learn from giving feedback, because it requires them to understand the challenge of the person who needs help. Start-Up Chile’s coworking space functions as another indirect way to foster knowledge exchanges between participants. A lot of knowledge sharing happens during informal conversations, which often take place in the kitchen or in a relaxation area of the coworking space. Other, more experienced, participants hold weekly informal office hours or even organize informal workshops on specific topics that are helpful for startup activities. This study identified two main mechanisms vital to the overall integration of acquired knowledge within the accelerator: (i) the coordination of formal knowledge sharing in the form of structured, mandatory, and formalized activities initiated by Start-Up Chile; and (ii) the facilitation of informal knowledge sharing within the accelerator community by providing opportunities for spontaneous knowledge sharing or for participants to initiate activities to teach each other. The following sections analyze the empirical data on both mechanisms in more detail. 5.3.3.1 Coordinating Formal Knowledge Sharing Within the Community One goal of Start-Up Chile is to make the knowledge of the participants accessible to everyone in the community. To this end, a variety of formal knowledge-sharing activities have been established, which this study has observed and grouped into three categories: platoons, workshops, and peer-to-peer mentoring. Start-Up Chile worked to ensure that knowledge sharing does not occur only among the most

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active networkers but also extends to more passive entrepreneurs. Some entrepreneurs are less confident than others, which leaves them rather quiet, with fewer interactions. Start-Up Chile circumvented participant passivity by implementing formal knowledge sharing, in which active participation is mandatory, even for quiet entrepreneurs. The first instrument with which Start-Up Chile facilitates formal knowledge sharing is the platoon (also presented in Section 4.2.2). Start-Up Chile manager EE-4, who also supervises platoons, described these periodic group meetings as follows: We have this account executive, and they have something that we call a platoon. A platoon: it is a session of eight, nine people. It is like for peerto-peer feedback for like tracking. That is the way that they are like, “Hey I have this problem, so how can I solve this?” and then “Oh, I did it this way!” and they share all this information. And the account executives are in that meeting, right? So, what I am doing is to take all this information and sharing with them and this question, I mean like, “Hey, you answered this, why did you answer that?” That was what the account executives are doing. But it is not like the most important part of the platoon, because the platoon was made at the beginning for peer-to-peer feedback. So, now we are trying to introduce like these KPI [key performance indicator] questions as well. (EE-4) This indicates that platoons are moderated by so-called account executives, who monitor each startup in their platoon group over the course of the whole accelerator program. By doing so, they gain deep insight into their challenges, their progress, and the strengths and weaknesses of their founders. This enables them to help participants improve their peer-to-peer feedback and knowledge transfer by asking the right questions. During the platoons, each startup presents, one after another, their recent progress and the challenges that they are currently facing. They end their presentation by announcing the milestones that they want to achieve in the coming weeks. The presented issues are then discussed with other participants. In this way, participants receive valuable advice and share their knowledge. CE-2 and FE-5 also described how The Platoons were very good, because it was a good place to share knowledge. (CE-2) The platoons certainly [helped with knowledge transferring], because you give advice to the other startups, and you like hold each other accountable a bit. (FE-5) As participants talk about their plans and goals for the coming weeks, they begin to hold each other accountable by questioning their results in the next platoon. They discuss the reasons that goals have not been achieved, which helps them to identify their weaknesses or erroneous assumptions and to develop ways to improve. Entrepreneurs sometimes overthink and overcomplicate certain issues, and

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the fresh eyes of their fellow participants in the platoon help reframe challenges and obtain a more removed perspective. A Colombian entrepreneur reflected how There are six [startups] in mine, [and] you have the best inputs ever. Because you are just so into your business and your market, you know so much stuff that maybe you do not see the basic things. They [peers] are from other industries, they are from other backgrounds, they are like “Oh have you thought of that” and I am like “Oh I have never thought of that, thank you.” (FE-8) Most of the platoon attendees gain deep insight into the businesses of their fellow participants and begin to actively use the knowledge of others to solve their own problems. This transfer of tacit knowledge (Polanyi, 2009), which is induced by platoons, is often continued in informal settings. TSF participant FE-9 reported her positive experience with platoons: There are the platoons and platoons “Wow. It was amazing.” Like everyone watching your presentation, everyone giving you advice, like even after the platoons, some people were like stopping you. “Oh, I thought about that” and “Have you ever tried something like this?” So, people were very, like, in Brazil, you say “paupitera,” they like to give advice. (FE-9) The second instrument of Start-Up Chile’s formal knowledge-sharing structures is workshops. While platoons work with individual challenges faced by the startups, there are also more general formal knowledge sharing activities at Start-Up Chile. The second cornerstone of organized knowledge sharing within the accelerator is a series of workshops. The entrepreneurs have weekly workshops on different topics, such as marketing or finance. Some are held by external experts, while others are organized by the accelerator’s staff, and some are even held by participants who possess expert knowledge in some particular area of interest. For instance, workshops for the TSF program, whose participants are mostly in the ideation phase, focus on basic startup methodology, which is mainly taught by the staff of Start-Up Chile. At such workshops, startups discuss how they can use certain existing methods, such as Lean Startup (Ries, 2011), for their own businesses. In this process, program participants explain to each other how they applied best practices in the past and what results they achieved. The more advanced entrepreneurs from the Seed Program discuss topics such as entrepreneurial marketing strategies. Chilean participant CE-2 held a workshop in entrepreneurial finance for his peers and explained, Start-Up Chile Academies is the instances where Start-Up Chile brings some expert in some topic to talk about something; there were three of them that I think was really useful for us, and also I had to do one Start-Up Chile Academy. It was also good for me to do that because, I mean, you are talking to your peers and so they get to know you, they know what you are

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doing. Three different people after that workshop approached me and ask[ed] me if I could help them with some investors, trying to get into their companies. (CE-2) Participation in the Start-Up Chile Academy workshops is partly mandatory, meaning that startups must attend a certain number of them. By doing so, StartUp Chile ensures that more experienced founders also take part, in order to enrich the overall quality of workshops. Another motive for making the workshops mandatory is concern about the absence of Chilean participants. Chilean entrepreneurs often did not come to the accelerator regularly due to their strong reliance on existing networks outside of Start-Up Chile, and they were more comfortable staying in their familiar environment. While foreign entrepreneurs had only their peer entrepreneurs for activities and communication, Chileans still used their local colleagues and friends who were easily accessible. By making workshop participation obligatory, the staff wanted to ensure the integration of Chileans into the Start-Up Chile program and community. Apart from workshops, the participants also have to undertake regular pitch training to learn how to present their startups to investors, customers, or business partners. The third instrument for formal knowledge sharing at Start-Up Chile is mentoring. This mostly occurs between participants of different programs and is systematically coordinated by the staff of Start-Up Chile. TSF participant FE-13 described her mentor as follows: I got a mentor who has already gone through the program, so they are not in the Seed currently. They are from a previous generation of Seed [ . . . ] and he is pretty great, he is very hands-on [ . . . ] too many hands-on, like we meet with . . . so he is supposed to be with me one hour a month, but he is meeting with me two hours a week. And he is very demanding, very demanding of me and it is the only way he knows because that is what he does with himself, he is a very ambitious and driven person. (FE-13) Start-Up Chile allocates alumni as mentors for new participants, which creates important dynamics of peer-to-peer knowledge sharing within the accelerator’s network. By sharing their experience of entrepreneurial processes and opportunities during the program, alumni can help new participants integrate themselves and their resources quickly. They are familiar with potential hindrances of the program, such as too much and insufficiently focused socializing, and therefore are very hands-on with and demanding of their peers. Having gone through the program, alumni can also help new participants with tips on how to handle the obligatory administrative work. Furthermore, as former participants, alumni have instant legitimacy for new participants. While literature acknowledges the importance of mentors’ roles in venture survival and growth (Bisk, 2007; St-Jean &

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Tremblay, 2011; Sullivan, 2000), scholars commonly assume that mentors are external agents. The mentor-mentee settings at Start-Up Chile are idiosyncratic. Literature suggests that accelerators formalize both group-level learning and customized individual learning (Bliemel et al., 2019; Brown et al., 2019a). They either employ educational elements for the whole cohort, such as workshops, or they formalize individual knowledge sharing through mentoring (Cohen et al., 2019). The initial research on accelerators further suggested that informal peer-to-peer learning is an actively facilitated key element of customized learning opportunities for accelerator participants (Bliemel et al., 2019; Malek et al., 2014; Pauwels et al., 2016). This beneficial, informal, peer-to-peer knowledge sharing can be extended by formalized structures, such as the above-mentioned platoons at StartUp Chile. These structures encourage passive participants to become integrated into peer-to-peer learning processes. Experienced entrepreneurs can serve as role models for less experienced accelerator participants, which creates significant informal learning opportunities (Zozimo, Jack, & Hamilton, 2017). The literature on accelerators furthermore emphasizes the provision of mentors as a vital program element for customized learning for participants (Cohen et al., 2019; Pauwels et al., 2016). Data suggest that the accelerator’s mentoring activities can be extended by formalized peer-to-peer mentoring. The coordination of the described formalized knowledge sharing mechanisms ensures the ongoing transfer of knowledge within the accelerator. This improves the participants’ startups and supports the integration of the participants’ knowledge. RP6a: Public accelerators integrate and accumulate acquired resources by coordinating formal knowledge sharing within the accelerator community in the form of platoons, workshops, and peer-to-peer mentoring. 5.3.3.2 Facilitating Informal Knowledge Sharing Within the Community The second important mechanism used by Start-Up Chile to enhance learning and knowledge exchange within the acceleration program was the facilitation of informal knowledge sharing within the community. One way for Start-Up Chile to facilitate informal knowledge exchange was to purposefully create connections between participants and alumni. In cases in which participants did not know anyone who could help them, they normally went to the Start-Up Chile staff, who then tried to find someone in the community or the wider network and arrange the contact. In other words, Start-Up Chile’s staff functions as a hub within the overall network of participants, similar to the notion of structural holes in network research (Burt, 1992, 2004). In case there is no current participant who can help, the staff involved alumni from all around the world.

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However, most of the time, they found someone in the current program cohort. The Start-Up Chile manager EE-4 explained, This guy who was like “Hey, I need something from . . . somebody to train me in SCRUM” – that agile methodology, and I was like “Hey you are having a SCRUM master just beside you and can you meet her?” And that is how we are trying to do with all that they came from us and we realized that if the asset is not emotional, maybe it could be in the community. We normally throw it back. (EE-4) The second instrument for informal knowledge sharing is a coworking space. Much more informal knowledge sharing within the accelerator took place naturally and spontaneously in informal settings. Since the duration of formal activities is pre-defined, participants often carry on discussions that started in formal activities in informal settings. Alternatively, participants often began their discussions in informal settings and re-addressed them in formal meetings. Interactions in formal and informal settings are interrelated and reinforce each other. Notably, the interface between formal and informal knowledge sharing was the coworking space, in which both took place. It was the most important instrument for informal knowledge sharing facilitation for four main reasons: (i) random encounters, (ii) direct help for challenges, (iii) informal workshop organization, and (iv) informal office hours. First, as most participants spend every day at Start-Up Chile’s coworking space, a lot of spontaneous and unintended informal knowledge sharing occurred throughout the day. The coworking space has colorful furniture and office materials and has spacious rooms such as a large hall with a high ceiling, where entrepreneurs can work individually, meet other people, and relax while sitting on the sofa. Such environments create an open atmosphere, which enables participants to frankly exchange their ideas and experiences. This office space also has a relaxation area that encourages interaction. Most of these conversations are related to the participants’ startup activities and their current challenges. Second, when entrepreneurs face problems while working in the coworking space, they immediately look for fellow participants who could help them overcome these challenges. FE-3 shared her experience at the coworking space: I like a lot the coworking space, and what I really like also is that if I have any questions or anything, there is always someone from the program whom I can ask and who helps facilitate it. (FE-3) Often a chat in the kitchen while preparing coffee results in a more extended discussion on some startup related issues. Some people talk about their struggles with early customers, others about new methods they applied. Alumnus FE-1, from India, described the gradual improvements he experienced during the program, which he linked to the help of his fellow participants:

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The people we met here [in the coworking space] helped us to make many changes in almost every program. And then help us, come up with new business models or like help us change a certain aspect of our business model. Because at the end of the day, it is not hardware what we are building, brings the revenue it is the business model. That really helped us [ . . . ] for example, when it comes to the business model thing, it took almost like one or two months. Because just like not . . . it is not one day one person not like that. Some of the guys I met here in our generation are like really serial entrepreneurs. They did before like some really successful exits, some of them got really well funded, some of them were having like five or six startups before. So, they kind of helped us focus like “Okay, this is not the right way to do, do this way. . . . ” At least I got mentored by our startup groom around 50–60 people on the course of two–three months. (FE-1) For this alumnus, the intensive interactions with 50 to 60 other entrepreneurs were more than a simple exchange of knowledge, and he even used the reference of mentors for his fellow entrepreneurs. This quote demonstrates substantial nature of the knowledge exchanged by the entrepreneurs. Furthermore, the knowledge transfer was not one-way but two-way, as FE-1 helped his fellow participants with other topics. He was more proficient with technology and startup-related hardware, stating, For me, I actually transferred more [information] about the hardware ecosystems like what are the few other hardware startups I met back those days. I helped them connect with some good designers, so, like explained them more about manufacturing facilities back in China, how it worked and discussed few things about the logistics stuff, like how to manage the problems that we faced during the logistics happened. (FE-1) Third, some participants took concrete actions to formalize such a natural knowledge exchange processes at the coworking space by developing a system to organize self-initiated workshops for others. In this way, they ensured that knowledge was also deliberately transferred to the more passive entrepreneurs. A Colombian entrepreneur FE-8 recalled the invention of a “Wine Wednesday”: “Hey, we can help each other a lot because maybe you are good with video, you are good with sales, you are good with programming,” and they said “Okay, let us drink wine on Wednesdays and let us do like Wine Wednesdays and talk about our . . . how can we help each other.” (FE-8) In this example, one can see how private initiatives of participants institutionalize knowledge exchange and transfer among entrepreneurs. These more structured informal knowledge exchanges are often induced by experiences during the formal knowledge sharing activities of Start-Up Chile. Participants appreciate formal occasions where they learn from each other but face certain limitations of the existing

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formalized knowledge exchange structure of the program. Platoons, for instance, have a time limit, and the participants take topics that did not receive enough discussion and continue to discuss them in private, another indication that formal and informal activities go hand in hand. For instance, the foreign entrepreneur FE-8, who had much B2B sales experience, noticed during a platoon how her fellow participants all struggled to sell their products. So, she offered them a private workshop for others. She explained that A week before, I noticed that in my platoon all of them were doing like very silly and basic sales, presales mistakes and I was like “Oh my god” and I talked to them after that and they were like “You know I love that you can help,” maybe I should do a talk. (FE-8) During this workshop, FE-8 shared her explicit knowledge. Literature suggests that explicit knowledge is easy to share and capture, as it is often based on established work (Nonaka & Takeuchi, 1995; Polanyi, 2009). This was done by holding a short presentation on the topic. Then each founder applied this knowledge to their own businesses with the guidance of everyone else. Fourth, other experienced founders organized de facto office hours, in which they coached and mentored their fellow participants on a one-on-one basis. The experienced serial entrepreneur FE-10 established “Couch Sessions” in the relaxation area of the coworking space. He stated, I tend to go to co-work when I know I have more flexibility and freedom and I have done most of my work so that I can be more engaged in the community, which then means when I am there, I tend to be very available. But I always physically for some reason or another . . . like finding a couch to sit on instead of like one of those uncomfortable chairs and so it has literally now become a thing amongst themselves this peer and then the staff calls it “FE-10’s [anonymized] coach or Couch Sessions,” right, and so literally I just park myself on a couch and then people just find their way to me. (FE-10) These informal coaching sessions held by experienced founders were rather typical during the week. While some of these informal volunteering coaches sought to build confidence in their fellow participants and motivate them to keep trying, others engaged in specific coaching on certain topics. They did not expect any direct compensation, knowing instead that they would receive help if needed. One of these informal coaches, CE-2, described how he unintendedly became a coach on finance-related topics: I decided to go to [the coworking space] to talk to quite a lot . . . around three times a week to work there; once it started going I started knowing some people and started to tell them I knew about finances, so they also started asking me a question about taxes, accounting all these. (CE-2)

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Connecting participants for peer-to-peer learning purposes is a common element of accelerators (Brown et al., 2019; Malek et al., 2014; Pauwels et al., 2016). Interestingly, though, coworking space is not part of most accelerator definitions. One reason might be the fact that coworking space is considered to be a core element of incubators, rather than accelerators (Cohen & Hochberg, 2014). At StartUp Chile, the coworking space is a central element of their efforts to build a community around mutual networking and knowledge sharing, and it serves as the main instrument to facilitate knowledge transfer in informal situations. It is furthermore the interface between formal and informal knowledge-sharing mechanisms. This is echoed in Gonzalez-Uribe and Leatherbee’s (2018) finding that an essential bundle of accelerator services, such as funding and coworking space, results in a significant increase in venture performance and fundraising when combined with formal knowledge sharing, which led them to coin the term “entrepreneurship schooling.” Their data furthermore suggest that coworking space alone has no measurable effect on venture performance (Gonzalez-Uribe & Leatherbee, 2018). This quantitative finding shows differences with the qualitative findings of this study, namely, that numerous informal learning occasions that took place in the coworking space. Although the data of this study does not allow differentiation between a group of entrepreneurs who received formal education in addition to coworking, the dynamics within the coworking space can be expected to lead to informal knowledge sharing on their own. Research on coworking spaces also suggests that one main benefit is collaboration and mutual learning (Spinuzzi, 2012). By directly and indirectly facilitating informal knowledge sharing, Start-Up Chile ensures that its participants learn from a wide range of fellow entrepreneurs during their stay at the accelerator. In this way, resources possessed by individuals in the program cohort are integrated within the accelerator. RP6b: Public accelerators integrate and accumulate acquired resources by facilitating informal knowledge sharing within the accelerator community through the provision of facilities, such as a coworking space that allows for informal encounters with fellow participants. 5.3.4 Organizational Learning and Knowledge Accumulation This section explains how organizational learning and knowledge accumulation took place within the Start-Up Chile accelerator. To understand the organizational learning of Start-Up Chile, it is important to first understand the latter’s governance structure. Public accelerators have special organizational attributes that differentiate from other types of organizations (Pauwels et al., 2016). The accelerator has a core group of employees with longterm contracts, who manage most of the internal processes, there is in addition a

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larger group of entrepreneurs who temporarily become quasi-part of the organization and lie at the center of most organizational tasks and processes. These entrepreneurs play different roles from those of employees in conventional firms, since they have no employee-employer relationship. At the same time, they are different from customers, because they do not pay for the service and products of the StartUp Chile accelerators. While they are neither customers nor employees, startups are temporally integrated into the loosely-defined organizational boundary of accelerators and play critical roles in accelerators’ learning process during the months of the program. All the participants’ prior knowledge is acquired outside of the organization, and the accelerator staff must make this knowledge accessible and convert the participant’s experiences and knowledge into organizational knowledge, by means of organizational learning. The empirical case demonstrated that Start-Up Chile facilitated occasions, such as group meetings, to conserve and accumulate both tacit knowledge built from managers’ individual experiences and explicit knowledge in form of data collected on the startups. This interplay of tacit and explicit knowledge is also reflected in Nonaka’s (1994) dynamic theory of organizational knowledge, which claims that “organizational knowledge is created through a continuous dialogue of tacit and explicit knowledge” (p. 14). The process of organizational learning at Start-Up Chile is driven in two ways: First, the accelerator encouraged and supported the staff’s individual-level learning. Second, Start-Up Chile undertook systematic approaches to acquire and accumulate organizational knowledge. Both mechanisms are further analyzed based on empirical data in the following sections. 5.3.4.1 Staff’s Individual Level of Learning The staff of Start-Up Chile must learn continuously from new cohorts of participants who join the programs every few months in order to acquire and accumulate as many resources as possible. This setting of the public accelerator offers rich individual learning opportunities to the staff, but also requires a high degree of adaptability, as the staff needs to adapt themselves to new community dynamics and challenges in every cohort. Start-Up Chile has two types of employees. The first group consists of the regular accelerator managers who are responsible for the accelerator’s processes, network, and worldwide marketing efforts. The second group is so-called account executives who are responsible for tracking participants and making sure that they comply with their contracts and follow the rules of Start-Up Chile. The staff learns differently depending on the group to which they belong. While the first group has a better view of the big picture and more different encounters with various

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participants, the second group has in-depth knowledge of a small group of participants. Individual learning on both types is outlined below. First, once a week, accelerator managers offer office hours for participants to help them with startup-specific problems. Supporting the participants requires them to dive deep into their challenges and consequently examine the startups’ experiences, leading to the acquisition of new knowledge. Through these face-to-face interactions with different entrepreneurs, the staff can build a repertoire of potential solutions for various problems and challenges that startups face in different settings. The staff can then actively use this pool of knowledge to solve the problems of future participants. The former Start-Up Chile manager EE-7 stated, I learned a lot working with other startups, you know, helping and supporting them, helping them manage a problem that would support them. (EE7) The role of the accelerator managers determines the scope of their learning opportunities. For instance, one of the accelerator managers is responsible for the alumni network. In this function, she stays connected with hundreds of alumni and coordinates their involvement in the acceleration processes, through, for example, mentoring activities. Through her cooperation with alumni startups, she acquired exclusive insights into post-program challenges and learned which accelerator processes had a sustainable impact. The second group of employees is called “account executives.” Their original purpose was to make sure that public money is spent in a desirable way from the policymakers’ point of view. Therefore, their main task was to handle the overall bureaucracy that is inevitable in a public organization. They tracked the expenses of participants and their impact on the local entrepreneurial ecosystem. Start-Up Chile realized that the account executives possessed the most detailed knowledge about each participant they monitored. They acquired unique insights into the micro-level dynamics within the accelerator, which led to new responsibilities, such as moderating the platoons. While most of the account executives did not have a business background, they quickly gained firsthand knowledge about the special challenges of startups and how to stimulate knowledge sharing among them and to guide startups to effective self-reflection. The Start-Up Chile manager EE-4 explained, Even if they [account executives] do not have a business background, they know a lot of things in that [startup support] part. So, the thing that I am only saying you do not need to know like the answer. You just need to know what questions you ask and how. (EE-4) Start-Up Chile relies to a large extent on its staff’s individual-level of learning. Hansen, Nohria, and Tierney (1999) suggested that this can be one viable strategy for knowledge management. They call it personalization, referring to knowledge

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management that builds on individual expertise and is channeled throughout the organization. The focus of a personalization knowledge management strategy lies on the person-to-person exchange of tacit knowledge (Hansen et al., 1999). LópezNicolás and Meroño-Cerdán (2011) found that personalization-centered knowledge management strategies significantly enhance innovation, organizational performance, and financial results. Crossan et al. (1999) suggested that organizational learning starts with the individual who intuits and interprets experiences. Freiling and Fichtner (2010) meaningfully extended this view by integrating the concept of absorptive capacity, that is, recognizing the value in information and assimilating it (Cohen & Levinthal, 1990; Volberda, Foss, & Lyles, 2010; Zahra & George, 2002). Cohen and Levinthal (1990) argued that learning and individual absorptive capacity are cumulative, and the accumulation process is more effective when it can be connected to prior knowledge. The account executives supervise new, unique startups every few months, and every platoon helps them become better at absorbing the information and enriching it by asking the right questions. The accelerator managers are responsible for the organizational processes of StartUp Chile and the improvement of the overall program. Wise and Valliere (2014) found that accelerator managers with their own startup experiences have beneficial effects on startup growth and survival. Accordingly, the weakness of Start-Up Chile’s accelerator managers is that none had any entrepreneurial background or startup experience before they joined Start-Up Chile. They are nevertheless well educated and motivated to learn and help startups as much as possible, compensating for their lack of entrepreneurial experience. The individual learning of employees guarantees that knowledge, from both a macro and a micro point of view, remains in the organization even after participants leave the program. However, the fact that most of this knowledge is tacit and bound to a specific employee suggests that the accelerator has little control over it and does not always have access to it (Mårtensson, 2000). RP7a: Public accelerators’ organizational learning process begins with the individual-level learning of the staff, who intuit, absorb, and interpret experiences collected through various types of interactions with participants. 5.3.4.2 Systematic Approaches to Acquiring and Accumulating Organizational Knowledge The individual-level learning of the staff is the necessary condition for the organizational learning of the public accelerator, but it does not facilitate organizationallevel learning automatically since most such learning remains in the form of individual tacit knowledge. Therefore, Start-Up Chile regularly holds staff meetings

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wherein experiences are discussed and, in some cases, transferred into new components of the acceleration program. One example is that the staff realized that every account executive has some participants that are stuck but do not verbalize their problems. They therefore established additional written reporting for participants to describe their progress. In addition to these staff meetings, Start-Up Chile takes two additional active measures to transfer and preserve the knowledge of both staff and participants within the organization in the form of explicit knowledge: Observation data is collected on the progress of participants during platoons or office hours, and participants must periodically fill out forms about their development and the impact of the acceleration program. Observation data on participants is gathered extensively so that the staff can understand the participants’ entrepreneurial processes and tailor their help. The account executives not only moderate the platoons but also document their own learning, as participant FE-13 explained: The more formal versions of this are a monthly platoon that they have, and I am sure you have heard of them, they are with an executive, your account executive she is literally taking notes on what you say. (FE-13) FE-13 pointed out that the account executives attentively protocoled all the information that could be documented from their platoons. The staff later digitalized such protocols so that the content is preserved in Start-Up Chile’s database and adds to the explicit knowledge of the organization. By doing so, every employee has access to information on every startup. Second, in addition to the data collection on the part of the account executives, Start-Up Chile asked their participants systematically to hand in periodic surveys on certain topics such as their progress. In these surveys, participants must use certain indicators, and the results are stored in a database. On the one hand, all this data is used to find undiscovered problems of startups and help solve them. On the other hand, this data compiles with the preserved knowledge stock of the accelerator. The responsible Start-Up Chile manager EE-4 explained that they were trying to get better results: So, we created this form, which we call like a pitstop . . . like in a race, right? There is a car that stops, like check that everything is okay and keeps going. And we are doing these every three weeks from now. Every three weeks we send them the form, they fill it out, and we realize that they are growing or not. Because at the beginning they have this meeting, which we call a milestone meeting. So, we could know if they are growing in order to achieve that goal. Each three weeks. So, we are always tracking them if they need something from us, they will ask it in that form, and we are going to deliver a lot of things that Start-Up Chile has. (EE-4)

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Literature suggests that managing the organization’s knowledge improves innovation and organizational performance (López-Nicolás & Meroño-Cerdán, 2011). Scholars commonly argue that making tacit knowledge explicit and formalized is an essential step to integrate individual-level knowledge into an organizational structure, as tacit knowledge is inherently elusive (Bhardwaj & Monin, 2006; Herschel, Nemati, & Steiger, 2001; Seidler-de Alwis & Hartmann, 2008; Stenmark, 2000). In addition to the above-mentioned personalization strategy of knowledge management, Hansen et al. (1999) suggested a second approach, which they call codification. This strategy relies on transferring knowledge from individuals into electronic document systems, where it can be accessed and re-used by other employees. Both the personalization and codification methods support and foster organizational learning (Hansen et al., 1999; López-Nicolás & Meroño-Cerdán, 2011). The interface between the individual and collective levels of learning is considered in Crossan et al.’s (1999) organizational learning process with its three levels individual, group, and organization. Employees’ experiences are interpreted not only individually but also in conversations with other employees. In group meetings, this interpretation is integrated through shared understanding and is saved in the database (Crossan et al., 1999). Based on the shared understanding, new routines are developed and tested in order to institutionalize the learning. One example is the above-cited Start-Up Chile manager EE-4, who implemented a new data collection instrument to help participants because the team noticed that information was missing. These systematic approaches to make tacit knowledge explicit are essential for the integration of the knowledge resources of participants into the acceleration program and for its accumulation on an organizational level. RP7b: Public accelerators integrate and accumulate acquired knowledge by taking concrete measures to make the individual tacit knowledge of the staff and participants explicit. 5.3.5 Summary of Resource Integration and Accumulation in the Accelerator Section 5.3 developed nine research propositions regarding the integration and accumulation of resources in the public accelerator.

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Step 2: Resource Integration and Accumulation in the Accelerator

Interactive Community

RP 4-6

2

RP 7

Entrepreneurial Ecosystem Public Accelerator

Participants

Accelerator staff Resource flow

Research Propositions RP4a: Public accelerators integrate and accumulate acquired resources into the organization by facilitating diverse community-building measures, such as the formation of social media groups and the organization of formal and informal events, to create a family-like community whose members share values, trust, and identity. RP4b: Public accelerators integrate and accumulate acquired resources by building an intra-program community within the accelerator through the creation of connections among participants in the same program. RP4c: Public accelerators integrate acquired resources by building an accelerator community through the creation of connections between participants of different cohorts, and accelerator programs through mentor-mentee relationships, mutual events, and buddy programs. RP5a: Public accelerators integrate and accumulate acquired resources by making the entrepreneurial mindset of

Section 5.3.1

5.3.2

172 participants visible, explicit, and more perceivable, which creates the foundation of a community-level culture. RP5b: Public accelerators integrate acquired resources by encouraging diverse participant interactions that merge individual-level entrepreneurial mindsets into an accelerator community culture. RP6a: Public accelerators integrate and accumulate acquired resources by coordinating formal knowledge sharing within the accelerator community in the form of platoons, workshops, and peer-to-peer mentoring. RP6b: Public accelerators integrate and accumulate acquired resources by facilitating informal knowledge sharing within the accelerator community through the provision of facilities, such as a coworking space that allows for informal encounters with fellow participants. RP7a: Public accelerators’ organizational learning process begins with the individual-level learning of the staff, who intuit, absorb, and interpret experiences collected through various types of interactions with participants. RP7b: Public accelerators integrate and accumulate acquired knowledge by taking concrete measures to make the individual tacit knowledge of the staff and participants explicit.

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5.3.3

5.3.4

Figure 25: Summary of Resource Integration and Accumulation in the Accelerator

This study identified four mechanisms that allow the accelerator to integrate and to develop resources within its organization: (i) community building (Section 5.3.1), (ii) building a community-level entrepreneurial culture (Section 5.3.2), (iii) facilitating knowledge sharing (Section 5.3.3), and (iv) organizational learning and knowledge accumulation (Section 5.3.4). Figure 25 visualizes the causalities elaborated in Section 5.3 and lists up all the nine research propositions. 5.4 Developing Entrepreneurial Ecosystem Resources Sections 5.2 and 5.3 presented how Start-Up Chile acquired resources from outside the ecosystem and integrated them into its organization. So far, everything has taken place within the public accelerator, and the Santiago ecosystem was a mere environmental setting, which did not play any significant role.

5.4 Developing Entrepreneurial Ecosystem Resources First-Order Categories • Participants import startup events • Participants are encouraged to organize events • Participants support events of other ecosystem actors • Participants commit to engage in the ecosystem • Start-Up Chile measures activities of participants • Participants receive no money without engagement • Invite stakeholders to events on startup topics • Stakeholders conduct topic specific workshops • Involve stakeholders in mentoring of participants

• Participants as role models • Media coverage of startups increases general interest • Participants give exciting insights into their entrepreneurial life • Participants use legitimacy to motivate local talent • Participants show encouraging opportunities • Participants mentoring pushes locals to proceed with ideas

• Participants help stakeholders to create support structures • Stakeholders are invited to the co-working space • Direct knowledge transfer through formal mentoring • Participants hire local talent and give training • Participants do informal mentoring activities

• Start-Up Chile as role model for other public organizations • Participants express entrepreneurial mindset at universities • Participants engage in startup events • Collaboration with local media on success stories • International media attention creates and reinforces a positive view towards startups

• Regular updates for policy makers • Integrating ideas of political actors • Social capital with corporations through event invitations • Collaboration with Start-Up Chile provides corporates with publicity • Investors get preferred access to participants • Investors are invited to demo days and other events

Second-Order Categories

173 Aggregated Dimensions

Facilitating the organization of startup related events

Section 5.4.1

Requiring participants to become involved in ecosystem

Interactions between accelerator and ecosystem

Integrating ecosystem stakeholders into accelerator processes

Section 5.4.2 Demonstrate the attractiveness of startups as a career opportunity Motivate local talent to proceed with ideas and found businesses

Activating local talent

Section 5.4.3 Coordinating formal knowledge transfer Facilitating informal knowledge transfer

Transferring knowledge to ecosystem

Section 5.4.4 Disseminating entrepreneurial culture to ecosystem stakeholders Creating a positive perception toward startups

Close dialog with political actors

Building and maintaining good connections to local corporates

Creating ecosystem-level entrepreneurial culture

Section 5.4.5

Creating entrepreneurial ecosystem social capital

Building close relationships with investors

Figure 26: Data Structure of Developing Entrepreneurial Ecosystem Resources

Section 5.4 illuminates the interactions between the public accelerator and the local ecosystem by investigating how Start-Up Chile has contributed to the development of ecosystem-level entrepreneurial resources. Several interviewees described this particular process using the analogy of a virus, saying that Start-Up Chile is infecting the Santiago entrepreneurial ecosystem, in

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a positive way, with entrepreneurial culture and knowledge. Start-Up Chile proactively used the acquired and integrated resources to develop entrepreneurial ecosystem resources, creating new resources and enhancing existing ones in the Santiago ecosystem. The emerging data structure is visualized in Figure 26. This study reveals that Start-Up Chile facilitated diverse interactions between the accelerator and the Santiago ecosystem to develop ecosystem-level entrepreneurial resources. These interactions are how Start-Up Chile develops entrepreneurial ecosystem resources, as presented in Section 5.4.1. Sections 5.4.2, 5.4.3, 5.4.4, and 5.4.5 introduce four mechanisms whereby ecosystem-level resources are developed: (i) activating local talent, (ii) facilitating knowledge transfer, (iii) creating ecosystem culture, and (iv) creating ecosystem social capital. The structure of this chapter is visualized in Figure 27. Facilitate Diverse Interactions (Section 5.4.1) Section 5.4.1.1

Section 5.4.1.2

Section 5.4.1.3

Start-up Related Events

Obligatory Engagement

Integrate Ecosystem Stakeholder

Activating Local Talent (Section 5.4.2)

Knowledge Transfer to Ecosystem (Section 5.4.3)

Creating an EcosystemLevel Entrepreneurial Culture (Section 5.4.4)

Section 5.4.2.1

Section 5.4.3.1

Section 5.4.4.1

Enhance the Desirability of Pursuing an Entrepreneurial Career

Coordinate Formal Knowledge Transfer

Disseminate Entrepreneurial Mindset

Section 5.4.2.2

Section 5.4.3.2

Section 5.4.4.2

Facilitate Informal Knowledge Transfer

Create a Regional-Level Positive Perception of Startups

Reduce Perceived Barriers to Founding Startups

Creating Ecosystem-Level Social Capital (Section 5.4.5)

Developing Entrepreneurial Ecosystem Resources

Figure 27: Developing Entrepreneurial Ecosystem Resources

5.4.1 Facilitating Diverse Interactions Between the Accelerator and the Ecosystem The first step of the development of ecosystem resources was the facilitation of diverse interactions between Start-Up Chile participants and ecosystem stakeholders. Literature suggests that a healthy level of interaction with ecosystem actors is one of the most critical determinants for mature entrepreneurial ecosystems and the efficiency of the overall resource flow (Brown & Mason, 2017; Spigel & Harrison, 2018). Gummesson and Mele (2010) argued that interactions within

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networks build the foundation on which resource integration takes place as ecosystem actors create and transfer resources through their multiple interactions (Gummesson & Mele, 2010). Start-Up Chile uses three methods to coordinate diverse sets of interactions between its participants and ecosystem actors. First, it facilitates the collaborative organization of startup-related events where participants and ecosystem stakeholders can interact. Second, it requires its participants to become active and involved members of the Santiago ecosystem. Third, it integrates a variety of ecosystem stakeholders into its own accelerator processes. 5.4.1.1 Startup-Related Events The first mechanism to facilitate interactions between Start-Up Chile participants and ecosystem actors is to collaboratively organize startup related events, primarily using two approaches. Start-Up Chile encourages its program participants to organize events within the ecosystem. They not only organized their own events but also supported other ecosystem stakeholders in organizing startup-related events. First, entrepreneurs at Start-Up Chile facilitate a variety of events throughout the entrepreneurial ecosystem. Former Start-Up Chile manager EE-7 reflected how program participants changed the local ecosystem by organizing events: I have seen a huge change. One of the big things is . . . Start-Up Chile brought a lot of, it imported a lot of events and activities and sparked a lot of stuff. And so, five years ago they were not things like startup weekends, hackathons, meet-ups, startup competitions, boot-camps, you name it. Now it is every weekend or week, there is something going on. (EE-7) These events pursue different objectives. Some center around networking, others on delivering the experience of being an entrepreneur. The latter is a special kind of event that directly creates entrepreneurial resources, with well-known examples being Startup Weekends and Hackathons (Briscoe & Mulligan, 2014). Startup Weekends are events organized by Google and TechStars in which participants work in mixed teams on startup ideas within one weekend. Participants learn effective ways to develop and validate startup ideas. Sometimes they continue to work on the ideas even after the event and go on to found startups. Hackathons target computer programmers, who work to find solutions for problems within a few days. The solutions, which are developed within the event, can actually become potential startup ideas as well, and often, teams continue to work on them after the event, eventually starting a business. Second, Start-Up Chile participants not only organize events themselves but also support other ecosystem actors in organizing events. The execution of such startup

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events often depends on the acquisition of experienced speakers and mentors. Event participants need guidance from mentors who have entrepreneurial experience to overcome various challenges within a limited time. Start-Up Chile encourages its participants to fulfill mentor functions for such events. A Chilean entrepreneur and one of the current organizers of Startup Weekend Santiago explained that We have a good alliance with Start-Up Chile; they [Start-Up Chile] provide mentors who are experts in Lean Startup methodology. So, we get those mentors and mentors who are experts or very well based on whatever specific topic we are addressing on the Startup Weekend. (CE-4) To reach different ecosystem actors, Start-Up Chile participants also collaborate with local universities, which offer facilities and access to local talent. One of the first Chilean participants of Start-Up Chile, who was working as a professor at a local university at the time of the interview, recalled his engagement: Yes, we had some initiatives, for example, we developed some events with the Start-Up Chile for example hackathons, 72 hours to create your own business basically. (CE-3) Literature suggests that such events can serve as important drivers of ecosystem development. Autio, Kenney, Mustar, Siegel, and Wright (2014) argued that events serve “as platforms for different constituencies of an ecosystem to coordinate their activities. Anchor events provide venues for the creation, maintenance, and rejuvenation of the relationships fundamental to the development of ecosystems, serve as important venues for the temporal coordination of activities during the emergence of ecosystems and thereafter, and from a performative perspective serve as venues for turning ideas into reality, and talk into action” (p. 1103). By analyzing the origins and different formats of Hackathons, Briscoe and Mulligan (2014) argued that the principal value of such events for participants is to meet and collaborate to create new links that can provide their future business activities for a long time. In these ways, Start-Up Chile creates and supports interactions between accelerator participants and various ecosystem participants, which results in the development of ecosystem-level entrepreneurial resources. RP8a: Public accelerators develop ecosystem-level entrepreneurial resources by facilitating the collaborative organization of startup-related events, which creates interactions between accelerator participants and various ecosystem stakeholders.

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5.4.1.2 Obligatory Engagement in the Entrepreneurial Ecosystem While some participants of Start-Up Chile proactively engage in the local entrepreneurial ecosystem, it is usually not the primary interest for entrepreneurs to conduct activities that support the local ecosystem rather than their startups. Their primary aim is, admittedly, to develop and grow their business during the acceleration program. However, Start-Up Chile is a public accelerator whose strategic aim is to foster the local entrepreneurial ecosystem. Therefore, Start-Up Chile needs an internal management system to ensure the engagement of its participants in the Santiago ecosystem. This section presents both direct and indirect measures taken by this management system. First, Start-Up Chile requires ecosystem engagement from participants in the exchange of equity-free money since its primary aim is supporting the development and growth of the Santiago ecosystem. Therefore, Start-Up Chile developed a system in which program participants can only receive the money when they engage in ecosystem development activities. FE-10, an American participant who is also well-connected with CORFO, described this system as a social contract: I think it is one of the most valuable aspects of what the program here does and this is what I have learned from talking with Tadashi and the CORFO people. This is kind of aspiration ecosystem-wide in Chile right is how Start-Up Chile is kind of social contract with us as founders are wrapped around this notion that you know we have been giving you this. We are together providing you some seed funding. We are providing you a temporary resident visa for a year. We are providing you a coworking space. We are providing you access to resources and support and knowledge and relationships but in exchange for that, social contract we need you to commit to the social contract part which is to help us get back to this community, to help use your experiences, your different perspective, your different cultural backgrounds, you know, all that stuff to help inspire, my phrase now . . . to help inspire or educate or empower like the current generation of citizens here in the country, right? And that can happen through university programs, it can happen through business-related programs, it can happen through other partner incubators, accelerators, right? And so that is what we do, and so as founders, we get pretty actively involved here. (FE-10) Start-Up Chile controls participants’ ecosystem activities by measuring the impact of the participant’s ecosystem involvement by the number of ecosystem actors who were reached and the overall time that was invested. By doing so, Start-Up Chile requires participants to become active in nurturing ecosystem resources. However, it is also true that these measurements necessitate substantial bureaucratic procedures.

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Notably, participants can decide by themselves what kind of activities they do, choosing whether to organize events for ecosystem actors, guest lectures at universities, or workshops and seminars for corporates. This freedom allows participants to develop new initiatives and feel responsible and motivated to contribute to ecosystem development. Second, due to the temporary nature of acceleration programs, most of the participants stay in Chile only for a limited time, which makes it difficult to give continuity to their ecosystem engagement and make their impact sustainable. The direct influence of Start-Up Chile on the sustainability of participants’ ecosystem engagement is rather limited. This study, however, observed an indirect system that manages participants’ ecosystem activities in the long run. One example is Startup Weekend Santiago. The current organizer of this event was initially a participant of Startup Weekend Santiago, organized by participants of Start-Up Chile: Well, I know his name is [anonymized], and he is Argentinean. He was in Start-Up Chile. A part of the program is, as you know they give you money give it back to society. So, one of the things that give you the most points was organizing a big event like Startup Weekend. So actually, a bunch of Argentinians organized the one I participated in. And it was a very successful event. (CE-4) The initial organizers left the country, but Startup Weekend Santiago continued to take place because CE-4 decided to take it over: I took over Startup Weekend Santiago because I realized that nobody was doing it. And for me, it was such an experience that I wanted more people to go through it. And we are creating a pretty strong community, who are helping people to do what they want. (CE-4) The Start-Up Chile alumnus FE-12 provided another example, of an event he initiated that was carried on independently of him: Well, one of the things that we had to do for Start-Up Chile is, what did they call it, especially, when you payback in something social. And the one thing that we did is start a game development meetup. So, it is a monthly meetup, where everyone that makes games come to. And we basically, based it on a model that we have in South Africa [ . . . ] we used that as a marketing platform and so, we did lots of talks, showed our tools to developers. So, when we came here there was nothing, so we thought we might as well try to start it. And you know it is still running now, so it is very successful. (FE-12) These pieces of empirical evidence show how the mandatory activities for StartUp Chile participants have facilitated interactions with ecosystem actors and eventually became voluntarily organized startup events. Literature suggests that encouraging factors such as expected financial or social rewards or avoidance of

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costs can facilitate knowledge sharing (Bartol & Srivastava, 2002; Cabrera & Cabrera, 2007; Lin, 2007; Lin & Lo, 2015). As most foreign entrepreneurs leave Santiago after the acceleration program, Start-Up Chile uses financial motivation instead of social rewards to ensure that participants are engaged in ecosystem activities such as knowledge sharing. RP8b: Public accelerators can facilitate diverse interactions between the accelerator and the ecosystem by obligating their participants to become actively involved in the ecosystem. 5.4.1.3 Integrating Ecosystem Stakeholders into Accelerator Processes The third mechanism to facilitate interactions between Start-Up Chile and the Santiago ecosystem is inviting various ecosystem actors to become active within the accelerator. Industry experts, investors, and other ecosystem stakeholders are invited to Start-Up Chile and integrated into the accelerator processes in three ways: (i) public events, (ii) topic-specific workshops, and (iii) mentoring. Start-Up Chile uses events and workshops to activate ecosystem stakeholders and to ensure that they interact with accelerator participants. One example is Tech Evenings, which were organized to address certain topics, such as sustainability or financial technology, to spark the interest of certain Chilean corporations and other organizations. While networking was one important part of such an event, there have also been presentations of innovative business models related to the topic at hand. Start-Up Chile not only invited ecosystem actors to events but also invited industry experts to actively hold workshops for accelerator participants. Start-Up Chile manager EE-4 described how Start-Up Chile tries to bring external knowledge into the accelerator: We have another initiative which is called Business Insight that we have once a month. [ . . . ] And this once a month and we normally invite experts to come here and talk to like a really small group. It could be like until 15 people or less [ . . . ] we have something [ . . . ] that we call open acceleration program. It is the thing that we are not the ones creating knowledge that we are trying to bring into the ecosystem to the entrepreneurs. So, that is the main activity we should do. (EE-4) By teaching startup participants, ecosystem actors also learn how fast-moving innovative startups deal with their challenges. Such interactions provide them with the chance to see the growth potential and innovation capacity of startups. These fruitful discussions often lead to follow-up activities between these stakeholders and participants.

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Ecosystem stakeholders also act as mentors within Start-Up Chile and learn about startups through their interaction with participants. The Chilean participant explained, We had a second mentor. This one was the anchor mentor the other one was the alternative mentor, the guy from Santander, in the innovation area of Santander, very good [ . . . ] he also put us in contact with some people in the company and in the mid-size companies area of banking in Santander [ . . . ] we saw each other in face to face meetings [ . . . ] And then in the meeting I guess it was [ . . . ] us talking 70% and he talking 30% because he was more like going straight to the point. (CE-2) This statement from CE-2 shows that the mentoring activities of ecosystem stakeholders at Start-Up Chile are beneficial for mutual learning and extension of networks. It is a win-win situation for both Start-Up Chie entrepreneurs and ecosystem stakeholders. While the literature on mentors is surprisingly scarce, despite their integral roles in modern startups scenes, scholars revealed several aspects of mentoring. For instance, Ahsan, Zheng, DeNoble, and Musteen (2018) found that effective mentoring shaped the entrepreneurial identity and venture progress of student entrepreneurship. Bliemel et al. (2019) suggested that mentors play a central role in continuously reinforcing linkages between the ecosystem and the accelerators and their participants. Furthermore, mentoring is considered to increase the performance of entrepreneurs (Ozgen & Baron, 2007). Consequently, the literature on entrepreneurial ecosystems emphasizes the importance of mentors and positions it as a social resource that entrepreneurs access through their networks (Brown & Mason, 2017; Spigel, 2017). The integration of ecosystem stakeholders into the accelerator processes allows Start-Up Chile to develop resources in a particular area through purposefully initiated activities. Experts from corporations within the entrepreneurial ecosystem learn about new approaches to innovation and how their companies can profit from the ecosystem, while startups profit from their expert knowledge. RP8c: Public accelerators develop ecosystem resources by facilitating diverse sets of interactions between the accelerator and the ecosystem through the integration of ecosystem stakeholders into accelerator processes. 5.4.2 Activating Local Talent One of the characteristics of nascent entrepreneurial ecosystems is the presence of a limited number of actors and resources, which prevents efficient self-organization and dynamic interactions (Brown & Mason, 2017; Roundy et al., 2018). Therefore, increasing the number of local ecosystem actors is useful for the early evolution of entrepreneurial ecosystems. Activating new entrepreneurial talent is

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one way to create new resources for nascent entrepreneurial ecosystems (Spigel & Harrison, 2018). Roundy et al. (2018) suggested that resource injections, in combination with an increase in the amount of local talent seeking to become entrepreneurs, is vital to create well-functioning entrepreneurial ecosystems. However, the less developed an entrepreneurial ecosystem is, the more difficult it is for local talent to pursue an entrepreneurial career. Start-Up Chile uses its participants to activate local talent in two ways: (i) enhancing the social desirability of an entrepreneurial career and (ii) reducing the perceived barriers to starting an entrepreneurial career. 5.4.2.1 Enhancing the Desirability of Pursuing an Entrepreneurial Career Before Start-Up Chile was initiated in 2010, Chile already had high early-stage entrepreneurial activity rates (Bosma et al., 2008). However, most entrepreneurial activities were small businesses rather than growth-oriented startups. People with strong potential talent, such as university graduates, were more interested in stable jobs at established corporations. Interview partners referred to missing success stories as one possible explanation of why founding a startup was not considered an attractive career opportunity at that time. The first employee of Start-Up Chile, VC-1, who became an investor, remembers the early days: At that time, the startup was not even the word. An entrepreneur not even a word [ . . . ] and I am talking about eight years ago. Just yesterday for history matters. [ . . . ] The concept here was . . . we know these talented people in Chile. However, the culture is not aware of how to do things, how to actually startup business. (VC-1) Several pieces of empirical evidence indicate that Start-Up Chile has enhanced the perceived desirability of an entrepreneurial career in Chilean society: (i) entrepreneurial role models, (ii) media presence, and (iii) accessible insights of entrepreneurial life. Entrepreneurs of Start-Up Chile became entrepreneurial role models. By practicing startup entrepreneurial activities and making visible progress in business development, they proved that startups could be successful in the nascent entrepreneurial ecosystem of Santiago. Previously, locals stayed away from startup activities due to the lack of precedent. The early Start-Up Chile employee VC-1 remembered that foreign entrepreneurs changed the narrative on entrepreneurial opportunities in Chile: And then it came examples of guys actually making it . . . of guys staying in Chile because they saw opportunities. (VC-1) Even though the success stories were smaller compared to those in more mature entrepreneurial ecosystems, even moderate success was already sufficiently

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impactful to produce role models for local talent and to change their perception of startups. The Start-Up Chile intern EE-3 mentioned, Because I think what was missing here is role models. Like I have read a study that one time in entrepreneurship that if you have role models then you really have actually more likely to do something entrepreneurial and I think this is what Start-Up Chile is doing quite well, they are producing role models. (EE-3) The investor VC-2, who worked for a local incubator credited Start-Up Chile with generating the first evidence of successful startup careers: Then there is Start-Up Chile [ . . . ] that has attracted a lot of international talent and attention to the country. And that has helped not only because we [the Santiago ecosystem] are being known outside, but because it has served as proof for us, ourselves, the Chilean just are believing in this. Previously, it was very difficult to support a startup scene and the dream of the entrepreneurship heart of Latin America because you got no evidence. Start-Up Chile actually planted the first evidence. (VC-2) The continuous inflow of entrepreneurs from all around the world into the Santiago ecosystem has strengthened this overall perception of society. Over the first eight years, Start-Up Chile accelerated around 1,600 startups of which more than half were attracted from foreign countries (“Start-Up Chile,” n.d.). The chief executive officer (CEO) of a successful corporate accelerator EE-8 in Santiago described let us bring here foreigners so that everyone can see that everyone can be an entrepreneur. Let us use foreigners to make speeches in universities or whatever. Let us spread the word. Let us create Start-Up Chile as a viral instrument where we have this virus as foreign startups who will be here in six months and can spread us. It happens. It works perfectly. (EE-8) Media has also played a critical role in disseminating a positive image of startups in Chilean society. The constant inflow of global entrepreneurs and their activities in the Santiago entrepreneurial ecosystem attracted the interest of media, such as newspapers. Stories about foreign startups who decided to come to Chile for participation in public acceleration programs were new and exciting to the local Chilean community. The executive of a corporate accelerator EE-8 described how newspapers started writing about startups, while the investor VC-3 added that this everyday information on startups made entrepreneurship more popular: The biggest paper of news in Chile created a section every Monday, talking about innovation entrepreneurship. So, every Monday you know, okay, let us see what is happening in the Chilean ecosystem, today, it has, in Incurio it has Dere Financiero, two newspapers, every Monday the sections were, I do not know, eight or seven papers about success stories, the new launch. (EE-8)

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Startups’ role is more popular for young students. They want to be entrepreneurs because they see in the newspaper every day some entrepreneurs. (VC-3) The growing media attention paid to startups raised awareness among local talent. Previously, startups were something special that rarely became successful and were founded either by geniuses or by hazardous risk seekers. With the growing variety of startup and founder backgrounds that were published in media, entrepreneurship started to become more reasonable as a career option. Third, it is noteworthy that the role models whom Start-Up Chile produced were not unrealistic but were accessible for everyone interested in learning more about life as an entrepreneur. Many activities from Start-Up Chile participants are focused on universities, as they have access to the future talent pool. For instance, the well-connected and experienced foreign entrepreneur FE-10 spontaneously decided to organize an “ask me anything” (AMA) event for the students of one university, because he realized that they had so many questions about being an entrepreneur, and students were simply curious about the life of entrepreneurs. He therefore invited entrepreneurs of different backgrounds to form a panel that could be questioned by students. FE-10 reported in detail: We did that AMA because I had engaged with so many of those kids, there are probably 300 kids in this program. [ . . . ] I could just sense in the context of the vibe that they do not know what they do not know. [ . . . ] I literally wanted to give whoever showed up that night the opportunity to talk to us about anything. [ . . . ] Who was the panel? Me, a guy named [anonymized], who is a local Chilean, he has never gone to Start-Up Chile, who was a dentist for fifteen years and then decided to create a technology company in the dental industry, and he is a phenomenal success and a great human being but he is a local from kind of the elite class. [Anonymized] and I, from Start-Up Chile [ . . . ] she is a local Chilean who went to like a middle-class university [ . . . anonymized] from [anonymized] in Mexico/Columbia/Canada [ . . . ] she has lived in three different countries and yet she is a Latina. [ . . . anonymized], who is from Buenos Aires, who is 25 years old and runs a ridiculously successful company [ . . . ] And yet he failed miserably his first business, which he started while he was in university in Buenos Aires, quit, walked away. [ . . . ] lived in Israel in Tel Aviv for a year and stumbled into [ . . . ] this amazing mentor-type experienced people who then really retaught him like how to be a successful entrepreneur and he is kicking ass in Buenos Aires. [ . . . ] Just to give these kids differing examples. (FE-10)

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All these different types of entrepreneurs from this AMA session provided students with diverse first-hand information on how they became entrepreneurs and steps students could take towards starting an innovative business. In nascent entrepreneurial ecosystems, most talent is attracted by large corporations that dominate the local economic system (Brown & Mason, 2017). The existing human capital can only be transformed into entrepreneurial resources if society acknowledges entrepreneurship as a viable alternative career opportunity (Morrison, 2000). Interestingly, all three approaches employed Start-Up Chile to enhance the desirability of an entrepreneurial career were already discussed by Henderson and Robertson (2000), who suggested that the feasibility of becoming an entrepreneur as perceived by prospective talent increases when examples of entrepreneurs and their startups are provided, when the media credibly spreads the word, and when students are encouraged at university events. Providing credible role models for successful entrepreneurial careers in particular attracts the curiosity of local talent (Bosma, Hessels, Schutjens, van Praag, & Verheul, 2012). Seeing dynamic and innovative startups tackling new opportunities increases their interest in learning more, which nurtures the emergence of new entrepreneurial resources. RP9a: Public accelerators create accessible entrepreneurial role models, which are multiplied by media and enhance the perceived desirability of startups, serving to activate untapped local entrepreneurial talent. 5.4.2.2 Reducing Perceived Barriers to Founding Startups The previous section demonstrated that Chilean people increasingly began to perceive a startup as a desirable career option after the dissemination of demonstrable success stories of Start-Up Chile participants. Desirability is important to activate untapped entrepreneurial talent, but startup entrepreneurs taking actual steps to develop an innovative business is much more complicated than simply becoming curious about entrepreneurship. Nascent entrepreneurs have a rocky road ahead and therefore need support to overcome difficulties. Empirical data showed that foreign Start-Up Chile participants actively motivated local talent to proceed with their ideas and found a startup by building global potential among local entrepreneurs and by motivating local talent as mentors. On various occasions ranging from informal conversations to formal events, StartUp Chile entrepreneurs actively encourage local talent to take the first step. These occasions functioned less to facilitate knowledge transfer and more to reduce fear and motivate local talent to step out of their comfort zone. The foreign Start-Up Chile alumnus FE-1 recalled,

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But one thing I even now whenever I speak with someone new, I try to bring this message like if you really believe in your idea, you can do that, that was what I told them because we are doing it, so anyone can do. (FE-1) First, interactions between Start-Up Chile entrepreneurs and local talent has gradually built up locals’ entrepreneurial confidence. Local entrepreneurs began to believe in their potentials to become internationally successful startups. Interviewees often described Chileans as generally under-evaluating their country’s potential and having a certain sense of inferiority to other countries (especially those outside Latin America), which may be attributed to the country’s geographical isolation. Before Santiago grew into a respected startup hub, the Chileans did not believe in their own potential to create something new. However, the inflow of foreign entrepreneurs who repeatedly preach to them that they can also become entrepreneurs has changed their perspective. The executive of the local active corporate accelerator Wayra Chile described this dynamic as follows: So, when they come, guys from outside, just because he is from outside, he is better. And when that guy came to make a meetup or make a pitch or make a speech in the university or go to school and talk to little kids, they believe the guy. Because he is a foreigner. I can say you 100% that I put you to make a pitch into one university. The same pitch. And put a Chilean guy, you will have more impact and success. Making exactly the same pitch. [ . . . ] So when you have each year 1,000 entrepreneurs, making this kind of thing, of course there is an impact. (EE-8) Furthermore, foreign entrepreneurs showed Chileans that there are ways to market their products outside their own country, which increased perceived opportunities and the growth prospect of their business. Local opportunities are scarce, as Chile itself has rather a small market. The domestic market does not offer space for startups to scale their business. By mobilizing its foreign entrepreneurs, Start-Up Chile provided local entrepreneurs with a vision that exceeds country borders. They convinced talent that innovative solutions that work in Chile can also work abroad, as a young Chilean Start-Up participant explained: I think that was one of the victories of startup Chile. I think that for some generation, especial millennials I think . . . they convince you if you have a good solution. If you can work in Chile you can probably take it to Columbia, Peru or Mexico. (CE-1) Start-Up Chile also connected its participants as mentors to local entrepreneurs who were still in the ideation stage. The experience as startup entrepreneurs and Start-Up Chile participants provided the mentors with natural legitimacy in startup topics, which helped them to persuade local talent to proceed with their ideas. Chilean entrepreneur CE-4 explained that

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the experience that this entrepreneur can give to new entrepreneurs gets them more motivated than a teacher, who speaks about something that he does not necessarily know. (CE-4) The author observed a symbolic situation before the interview with FE-10. This interview took place on Saturday in a local Starbucks coffee shop. Before the interview, he mentored two local entrepreneurs who were about to start their business, which allowed the author to observe their interactions. During this meeting, FE-10 encouraged the two entrepreneurs to take the next step and said he would hold them accountable for the milestones that they promised to achieve after the previous mentoring. After the mentoring session, FE-10 explained that as founders, we get pretty actively involved here. [ . . . ] We just participated in one here on Saturday at a Starbucks with young people they are not even in the program that are local Chileans, right? So, to me [ . . . ] the rest of the day could go to shit . . . like this is [still] a good day because we just made a positive impact on those two young men’s lives [ . . . ] these guys which just were brought to me by Start-Up Chile [ . . . ] this was not part of the normal process that was just “We have got these guys and we would like to help them,” but if we have not seemed to be able to help them over the last two years so maybe . . . [we] can do this, right. And it has been great. (FE-10) In this example, one can see the impact that Start-Up Chile participants can have on local entrepreneurial talent through mentoring. Both Chilean entrepreneurs had been stuck in the idea stage over two years. They worked on their idea on the weekends, as they still were employed at local companies. They were unsure of how to leap into founding a business, as they barely made progress. The mentoring motivated them to become full-time founders, because it helped them to move on with their idea and because FE-10 constantly motivated them to proceed. He also pushed them to take uncomfortable but necessary steps, such as validating the idea with local restaurants (their target customers) and starting a test run with a handful of customers. This kind of mentoring motivated them to go beyond the idea phase. Discussions above revealed two critical steps to activate untapped local entrepreneurial talent. First, pubic accelerators can facilitate interactions between participants and local talent to build locals’ entrepreneurial confidence. This confidence has been addressed by regional studies. For instance, Liñán, Urbano, and Guerrero (2011) demonstrated regional variations in entrepreneurial intensions and manifested the importance that policymakers promote positive entrepreneurial values. Kibler, Kautonen, and Fink (2014) coined the term “regional social legitimacy of entrepreneurship” to conceptualize the impact of regional social norms on entrepreneurial activities. The second step is mentoring, of the kind seen in the example of FE-10, to encourage local entrepreneurs in the early stage. The literature on mentoring emphasizes

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that encouragement and motivation are central pillars of mentorship activities (Eby, Allen, Evans, Ng, & Dubois, 2008; Lefebvre & Redien-Collot, 2013). Indeed, Eby et al. (2008) named motivation directed to a large goal, such as founding a business as one of the easiest dimensions to influence for mentors in their mentees. Furthermore, talking to entrepreneurs and observing their approaches to grow their startups reduces the perceived uncertainty of potential entrepreneurs and their fear of failure (Wyrwich, Stuetzer, & Sternberg, 2016). By bringing foreign entrepreneurs to an ecosystem wherein they actively convince potential entrepreneurs to start businesses, Start-Up Chile plays a vital role in the activation and nurturing of entrepreneurial ecosystem resources. RP9b: Public accelerators develop existing ecosystem resources by building regional entrepreneurial confidence and supporting early-staged local entrepreneurs to overcome barriers. 5.4.3 Transferring Knowledge from the Accelerator to the Ecosystem Nascent entrepreneurial ecosystems with a low number of entrepreneurs lack entrepreneurial knowledge in their region, as this commodity is created through entrepreneurial activity over time (Spigel & Harrison, 2018) as ecosystem actors’ interactions facilitate the cumulative co-production of entrepreneurial knowledge (Malecki, 2011). While Sections 5.2 and 5.3 explained how a public accelerator obtained external knowledge and integrated it into the organization, the acquired knowledge remains within the boundary of the public accelerator in this situation. Carayannis et al., (2016) emphasized that the variety of knowledge flows between ecosystem stakeholders and their utilization produces more entrepreneurial activity and activity of a higher quality. They recognized knowledge as the most important ecosystem resource and linked knowledge to complex adaptive systems by asserting: “entrepreneurship occurs as an endeavor within a complex system of systems throughout which knowledge is the primary content” (Carayannis et al., 2016, p. 634). Acknowledging the importance of knowledge dissemination within the ecosystem, this section explains how the accelerator distributes the acquired knowledge to other ecosystem stakeholders. A comprehensive meta-study on human capital and entrepreneurial success by Unger, Rauch, Frese, and Rosenbusch (2011) emphasized the importance of knowledge acquisition and the transfer of knowledge because developing human capital was found to be crucial for entrepreneurial success. It is therefore vital for the development of nascent entrepreneurial ecosystems that entrepreneurial knowledge is not only acquired but also flows among various actors.

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The foreign Start-Up Chile participant FE-10 used the allegory of knowledge transfer as a steady process with numerous bilateral interactions that eventually turn into an ecosystem-wide dynamic: Because that energy and that intelligence with the experience, with that unique knowledge, is going to spread, and it might be one founder at a time. But it is going to . . . and then if we can find other people and drop in like a dot. Maybe . . . it is just a bunch of water, and there are red dots eventually the water becomes red. (FE-10) Start-Up Chile actively coordinated the knowledge transfer from the accelerator to the entrepreneurial ecosystem in two ways, as presented in the following sections: by coordinating formal knowledge transfer through the purposeful connection of other ecosystem actors with participants and by facilitating opportunities for informal knowledge transfer, such as encouraging participants to employ locals. 5.4.3.1 Coordinating Formal Knowledge Transfer Towards the Ecosystem According to several participants, including VC-1, EE-8, and VC-2, limited knowledge was available on startup-related tasks or processes in the Santiago entrepreneurial ecosystem, and even fewer knowledge transactions occurred. Consequently, one aim of Start-Up Chile was to bring entrepreneurial knowledge from abroad to the Santiago ecosystem and to disseminate it among local entrepreneurs and other ecosystem stakeholders. Start-Up Chile formally transferred knowledge to entrepreneurs and other ecosystem stakeholders from two sources: (i) from participants and (ii) from the staff of Start-Up Chile. Start-Up Chile ensured the knowledge transfer between its participants and other ecosystem stakeholders through formally coordinated interactions. In the process of integrating participants and their resources into the accelerator, the staff identified participants who possessed valuable knowledge for certain ecosystem stakeholders. They then purposefully connected participants and stakeholders. Start-Up Chile intern EE-3 explained that Start-Up Chile is also working together to get some other small accelerators, like ideas lab, and we have a lot of partners within the university, so like we go to a lot of universities are sort of visiting to see how it is working, so it is mutual. (EE-3) Universities are one of Start-Up Chile’s most important partners, as they yield new entrepreneurial talent for the Santiago ecosystem. Start-Up Chile participants are therefore sent to seminars and lectures, and sometimes even run entire courses: At the same time, many entrepreneurs were giving some courses at universities, different universities. Entire courses, not only just one class. Also, there were some of them in what type of classes are some of them starting

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to mentor some local businesses, some of them actually meet up with some local entrepreneurs and gave them all the edge they needed to go big outside of Chile. (VC-1) The partnership between Start-Up Chile and other ecosystem actors is reinforced by visits of Start-Up Chile participants to partner institutions with the aim of helping them with internal processes by sharing their knowledge on startup-related processes. Chilean participant CE-2, who was involved in such an activity, stated that there are many organizations in Chile that use Start-Up Chile’s assets or its entrepreneurs for free as mentors and the opinion of people [as advisers] that have been through the program in order to help other entrepreneurs. (CE-2) Another outward knowledge transfer mechanism of Start-Up Chile is that it sends its program participants to other ecosystem actors as mentors. Section 5.4.2.2 already introduced the case of FE-10, who mentored Chilean entrepreneurs on his weekends. Apart from motivating them to proceed with their ideas, he also helped them cope with challenges by applying his knowledge. Chilean startups that are not a part of Start-Up Chile can seek mentoring. Start-Up Chile manager EE-4 referred to this a systematized approach to help local entrepreneurs as a pre-acceleration program: But even if you are not part of the Start-Up Chile, you could join . . . this pre-acceleration program and you have some mentors that will be one of the participants of the program. (EE-4) Start-Up Chile also facilitates formal knowledge transfer by inviting ecosystem stakeholders to visit the Start-Up Chiles accelerator and its facilities. By doing so, Start-Up Chile can directly display its internal processes and spontaneously coordinate conversations with its participants on site. Start-Up Chile intern EE-3 stated, Now, for every week, we have from Chile and the world we have a lot of universities or a company visit, so we have a group of maybe 15 students with their professors, and they go to the company to tell them what the companies are doing. (EE-3) By inviting classes to visit Start-Up Chile, students gain first-hand insight into the everyday life of startups in the coworking space. All these coordinated activities of Start-Up Chile ensure the continuous knowledge transfer from the participants to the entrepreneurial ecosystem, and vice versa. By actively structuring these formalized approaches to knowledge transfer, Start-Up Chile can provide the entrepreneurial ecosystem and its stakeholders with targeted support.

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As presented in Section 2.1.4.2, Colombelli et al. (2019) termed organizations that exhibit a strong influence on knowledge distribution within nascent entrepreneurial ecosystems “anchor tenants.” They emphasized that knowledge does not flow one-way but that the proactive role of anchor tenants and existing synergies with other organizations create a process of collective learning within the ecosystem. In this way, anchor tenants use their surrounding network to close the gap between new knowledge and its subsequent application in startup-related processes (Colombelli et al., 2019). By applying the knowledge spillover theory of entrepreneurship, Audretsch and Lehmann (2005) argued that universities positively influence local firms with their knowledge output, which generates opportunities and adds to the overall knowledge capacity of the region (Audretsch & Lehmann, 2005). In the case of Start-Up Chile, the same could hold for accelerators, which enhance the regional knowledge capacity on startup-related topics and processes. Other ecosystem stakeholders do not merely access this accumulated knowledge but are proactively approached by Start-Up Chile’s formal knowledge-sharing mechanism. RP10a: Public accelerators nurture existing ecosystem resources by formally coordinating knowledge transfer from the accelerator to other ecosystem stakeholders, such as local support organizations or startups. 5.4.3.2 Facilitating Informal Knowledge Transfer Towards the Ecosystem While the formal coordination of knowledge transfer guaranteed targeted support and the continuous nurturing of resources, most knowledge transfer from participants to the Santiago ecosystem took place independently of the accelerator. In these instances, Start-Up Chile takes a more passive role by encouraging and facilitating informal knowledge transfer in two ways: (i) local startup employment and (ii) informal mentoring. Informal knowledge transfer occurred between Start-Up Chilean entrepreneurs and their local employees. Start-Up Chile offers equity-free money, but this does not mean that entrepreneurs can use this money for whatever purposes they please; in fact, possible uses for this money were predetermined by Start-Up Chile. One of these uses is the payment of salaries for local employees. This rule encourages participants to integrate local human capital into their startups, which results in informal knowledge transfer to local Chilean potential future entrepreneurs. The alumnus FE-2, who hired Chileans, remembered: We started with a team of three people, Romanians, and then when we got there, we added two more people for the team, and that are Chileans. (FE2) Local talent who become startup employees learn from the experiences of the founders and build social capital within the ecosystem. Even if Start-Up Chile

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entrepreneurs leave the country after the program, they often stay in touch or even keep their hired employees as part of their team. Romanian Start-Up Chile alumnus FE-2 reported, We are still working with them. No, they stayed in Chile, and two of the people in the team went on and relocated to Switzerland. (FE-2) The example of FE-2 in employing local talent is not atypical of Start-Up Chile participants. During their stay at Start-Up Chile, they often integrate Chileans into their workflows and continue working with them even after leaving the country. Before Start-Up Chile participants can profit from local human capital, they must train and develop their employees, as the latter has never worked in fast-paced startup businesses environments. South-African entrepreneur FE-12, who hired Chileans, described how, it also took us some time to get them in our line of, or our way of thinking, and like how to make delivery date clients and show up on time and things like that, and I think like we were quite intensely, and it took them some time to manage that intensity. (FE12) This quote shows that cultural differences are one of the main barriers to employing Chileans for foreign startups. These cultural differences relate not necessarily to national cultures but to entrepreneurial cultures. Start-Up Chile entrepreneurs deliver the entrepreneurial mindset, as well as ways of doing business, to their local Chilean entrepreneurs. Due to a variety of positive effects, Start-Up Chile encourages its participants to actively search for local human capital that is interested in working for startups. Foreign entrepreneur FE-5 explained, Many people on the program went to a recruitment fair at a university where they were gonna get interns, I think . . . I do not know if anybody ever actually did, but a lot of people went to the fair. There was a lot of chatter on the WhatsApp group about getting interns. (FE-5) Independently of support from Start-Up Chile, founders often reach out to local talent on their own. Foreign participants often struggle to use traditional methods, such as job searching portals on the internet, to find employees who match their expectations, for, in addition to language differences, cultural differences affect processes on the job market, raising barriers for foreign entrepreneurs to even publish a job offer. To circumvent this issue, the entrepreneurs thus employed other means of finding employees. One example is that the foreign entrepreneur FE-12 wanted to hire software developers for his startup and created a meetup for game developers in Santiago to attract local talent. Together with his cofounder, he presented their learnings in game development and created space for the local developer community to meet. At the same time, they advertised their open positions:

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So, that is another thing that we were very bad at initially, as like a way to recruit people from, so we tried to advertise through our meetups and eventually, that was how we found them. (FE-12) Other informal knowledge transfer is indirectly facilitated through formal activities, such as teaching at universities. Bringing different ecosystem actors together with Start-Up Chile participants creates various opportunities for continuous informal knowledge sharing. Start-Up Chile participant EE-10, who was involved in university courses, described how he began to meet students outside the classroom in order to help them with their business ideas: Progressively, over the course of the whole semester, teams started engaging with enough of us in the classroom that like then they engaged with me enough, they started asking the administrators of the program if it was okay and then if it was okay would I accept them wanting to meet me and get mentored with me and their project individually. And so, so the latter half of the semester these last couple months, I started regularly meeting with these eight maybe, nine different teams and they would come to our coworking space for, like, I met three teams here like last week one day, and then they would just come in and then we just pick up where we left off. (FE-10) Other participants were active in local meetups and became informal mentors of inexperienced local entrepreneurs outside universities, seen again in the mentorship engaged in by FE-10 (Section 5.4.2.2). Hiring Chileans engages in a special case of informal knowledge transfer, as doing so extends the transfer over longer periods of time. Literature suggests that employees in startups develop valuable human capital, which makes them better entrepreneurs (Elfenbein, Hamilton, & Zenger, 2019). Gompers, Lerner, and Scharfstein (2005) found out that entrepreneurial learning and the subsequent increase in startup-related human capital leads to an increase in so-called entrepreneurial spawning, which refers to employed individuals who leave their companies to start a business. Malecki (2018) argued that the informal flows of ideas and knowledge are the most important of all resource exchanges. Social network research suggests that information from random encounters can fill so-called structural holes (Ahuja, 2000; Burt, 1992), that is, the gaps between two or more networks that do not overlap. Burt (2004) argued that most interactions of people occur within groups with strong connections that have more homogeneity of information and behaviors than can be expected between two different groups. Individuals that connect the information and ideas of different groups create new valuable knowledge. In other words, while knowledge exchange with people from outside one’s close network is less frequent and more difficult to achieve, it is more valuable, due to the knowledge diversification in which it results.

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Start-Up Chile attempted to maximize opportunities for such informal knowledge exchanges between their participants and the local entrepreneurial ecosystem in order to develop local resources and facilitate continuous ecosystem development. RP10b: Public accelerators develop existing ecosystem resources by facilitating opportunities for informal knowledge transfer, such as the employment of local talent, or informal encounters of participants from the accelerator and other stakeholders of the ecosystem. 5.4.4 Creating an Ecosystem-Level Entrepreneurial Culture Literature suggests that a risk-averse, non-innovative regional culture that does not value entrepreneurship hinders the flow of resources towards an entrepreneurial ecosystem and between its actors (Brown & Mason, 2017; Saxenian, 1994; Spigel & Harrison, 2018). Consequently, Start-Up Chiles’s first goal was to facilitate cultural change in Chile. The former Start-Up Chile manager EE-7 explained, Start-Up Chile, its first phase or first couple years, was all about social impact programs. It was all about [how] we are going to change the culture of entrepreneur culture. (EE-7) Participants who were involved in the ecosystem during the last decade generally emphasized the progress that Start-Up Chile achieved with a cultural change towards entrepreneurship in the Santiago ecosystem. Investor VC-2, who is a former manager of an independent incubator that worked with startups years before the inception of Start-Up Chile, stated, We have an ecosystem that has been starting to get known outside and even inside Chile for just seven years. This whole business started in 2010, I would say probably with the Start-Up Chile program, probably you have heard of it. That kind of set us on a different path. But, yes, from 2010 up until 2017, many things have changed [ . . . ] the most interesting change I would probably say that comes from the people itself [ . . . ] this concept of entrepreneurship has become very, very lovable, very wanted by the people. (VC-2) Start-Up Chile began to contribute to the creation and development of the ecosystem-level entrepreneurial culture of Santiago by mobilizing the entrepreneurial mindset and culture of its participants and spreading it throughout the ecosystem. VC-1, who was one of the first Start-Up Chile managers, explained, The program was about bringing someone [entrepreneurs] for six months [ . . . ] and ask[ing] them in return to start meeting people, local people and show them how they do things, how things are done differently, how they approach things. So, we literally infected the recently born ecosystem. (VC-1)

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Start-Up Chile participants valued the creation of social capital, mutual learning, and entrepreneurial methodological principles, such as Lean Startup. After integrating their entrepreneurial mindset into the acceleration program, Start-Up Chile facilitates the creation of an ecosystem-level culture in two ways: by disseminating the entrepreneurial mindset from participants to other ecosystem stakeholders and by creating a positive perception of potential ecosystem stakeholders towards startups. The following two sections present the findings on both approaches. 5.4.4.1 Disseminating Entrepreneurial Mindset to Ecosystem Stakeholders Changing norms, behaviors, and values of society need extensive and continuous effort over long periods (Inglehart & Baker, 2000). When Start-Up Chile was initiated, its main goal was to spread an entrepreneurial mindset to numerous other potential ecosystem stakeholders. Several years later, Start-Up Chile still actively worked to bring cultural change to the Santiago entrepreneurial ecosystem. They used three main methods to disseminate the entrepreneurial culture and mindset of their own organization and of the foreign entrepreneurs in the region: (i) changing the mindset of policymakers, (ii) public speech to reach a broad audience, and (iii) individual interactions with local entrepreneurs. Several interview partners described the transformation of the Chilean culture towards entrepreneurship. Furthermore, the values and behaviors of foreign entrepreneurs, such as valuing collaborative and cooperative exchange between ecosystem actors, became more prevalent in the Santiago ecosystem. However, experienced Start-Up Chile participant FE-10 still observed much room for change and improvement, stating, So, that to me is like the massive opportunity here, right? Chilean culture is more closed. Actually, Chilean culture is more skeptical. Yes, Chilean entrepreneurial culture in this critical ecosystem is way less mature and developed. It is a teenager. It is just learning what to do with its muscles that it just created, and it started growing hair on its face. And it is just figuring out what the hell to do as a teenager. And it would be better, two years from now, five years from now, ten years from now, twenty years from now, right. But we cannot, there is no way to get it there except just to provide examples. I think there is a scapegoat easy stereotype, which is like “Why are not they more eager? Why are not they more engaged?” No one has told them to be more eager or engaged. (FE-1) The first dissemination type of entrepreneurial mindset and culture took place on the macro level with policymakers. Start-Up Chile is a public accelerator and therefore closely linked to political actors. This public accelerator is monitored by CORFO, which, for years, has been supporting diverse economic activities in Chile. While COFRO initiated Start-Up Chile, there have been several reverse

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effects, with Start-Up Chile contributing to changes within the organizational culture of COFRO. Responding to the demands of Start-Up Chile participants, COFRO has sped up administrative processes, reduced bureaucracy, and created a suitable governance structure to support innovative and growth-oriented startups. One of the first managers of Start-Up Chile, VC-1, recalled these structural changes of CORFO: And a lot of things with natural government bureaucracy, we had to cut that off somehow. So, a lot of favors for a lot of people. And at the end, we managed to change the CORFO structure in its all. In those terms of fewer papers, less bureaucracy. Faster everything because startups do not have time to waste and three months to do anything is too much. (VC-1) Second, Start-Up Chile and its participants proactively held public speeches to convey culture to a large audience in Santiago. Start-Up Chile realized that cultural change must start with the younger generation. Start-Up Chile participants are sent to universities not only for teaching purposes, but also to inspire students with motivating speeches that transfer an entrepreneurial mindset. The serial entrepreneur and Start-Up Chile participant FE-10 described Start-Up Chile’s focus on universities: Now, inside of the program, they have this subprogram called Founders Lab that [anonymized] runs. And Founders Lab connects to a lot of engagement opportunities for us as founders in the roles of mentors where judges or speakers throughout most of the university community and other parts of the ecosystem but really heavily like 90 percentile university community. (FE-10) Third, while inspiring speeches help reach larger numbers of students, Start-Up Chile also tried to purposefully transfer an entrepreneurial mindset to more specific target groups. Chilean entrepreneur CE-4 was one of the participants of the first Startup Weekend of Santiago, which was organized by Start-Up Chile entrepreneurs. He explained, When I get into Startup Weekend, and I see several learnings about collaboration and see how people from different teams are helping each other with “Hey I have a client for you, but we are competing for the same price and it is ok.” That really changed my mind, that collaboration part. That is what really got me over this world. (CE-4) This interviewee studied law, but the inspiration and learnings from this event entirely changed his career path. He quit his studies in order to become an entrepreneur, and in the last few years, he has been remarkably active in helping newcomer entrepreneurs integrate into the Santiago entrepreneurial ecosystem. CE-4 described what he learned from this 48-hour event and how it changed him:

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I think a bunch of things. To believe in yourself and in your own potential, to get out of the mold and do not follow the path that I want to be a good employee, I want to create something, I want to build something. (CE-4) The dissemination of the entrepreneurial mindset was also targeted at other ecosystem stakeholders. Entrepreneurial culture is not transferrable, as it is embedded in the institutional and historical context of the region. However, exposure to an entrepreneurial mindset can stimulate the emergence of entrepreneurial culture. When potential ecosystem actors are confronted with unknown elements of entrepreneurial culture, such as certain new values and norms, they start to rethink old approaches to business and innovation and gradually incorporate them into their behaviors (Inglehart & Baker, 2000). The literature on organizational culture suggests that numerous interactions among people who have legitimacy in society, are necessary to first demonstrate new values or behaviors. Following the actions of first-movers, the increasing number of people collectively act to practice new values and behaviors (Alvesson & Sveningsson, 2008; Gagliardi, 1986). In this way, organizational culture gradually transforms over time. What this study observed in the case of Start-Up Chile was somewhat comparable to the emergence and development of organizational culture. Start-Up Chile sent out its entrepreneurs to show new values and collectively create new experiences with ecosystem stakeholders in Santiago. Empirical data also suggests that these entrepreneurs have legitimacy due to their participation in Start-Up Chile programs and to their international experience. Valuing collaboration instead of fierce competition and giving without the expectation of instant reward are important cultural elements that Start-Up Chile introduced to other stakeholders in the Santiago entrepreneurial ecosystem. This led to the paradoxical situation of actors collaborating while simultaneously competing for access to scarce resources. This kind of relationship is called coopetition in literature and is driven by the heterogeneity of resources that sometimes cannot be shared because of the creation of a win-lose situation, such as financial capital, and sometimes can be enhanced in collaborative activities that create win-win situations such as shared knowledge (Bengtsson & Kock, 2000). RP11a: Public accelerators disseminate an entrepreneurial mindset to ecosystem stakeholders on multiple levels, which contributes to the creation and development of a coopetive entrepreneurial culture within the local ecosystem. 5.4.4.2 Creating a Regional-Level Positive Perception of Startups The activities of Start-Up Chile to disseminate an entrepreneurial mindset were directed at various entrepreneurial ecosystem stakeholders, such as university students and corporates. Some ecosystem stakeholders, such as universities and their

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students, were open to new ideas, and it did not take long for them to begin to interact with the growing community and startups. Other stakeholders were cautious or even skeptical about getting involved in the local startup scene. Interviewees in this study often named corporations and potential investors in this regard. For instance, EE-4 or VC-1 stressed the fact that the ecosystem lacks financial capital, as there are almost no VCs who invest in early-stage startups. They argued that it has something to do with the value and belief of potential VCs, who are passive and risk-averse. Experienced foreign entrepreneur FE-14 explained his reasoning for why there is a lack of investors: [Anonymized was a startup that formed around 2010 or so [ . . . and] they had a really shitty product; it was really bad, bad interface, bad user experience, really difficult business model. [ . . . ] and they received I think 5 million dollars in funding. [ . . . ] I had actually someone I knew that was working for them and think they were seen as Chile’s answer to a Silicon Valley startup. Here is a bunch of money; go nuts and I think they were burning close to a hundred million pesos per month. [ . . . ] No one understood it [the product and business model], and it failed. [ . . . ] I think there is something lingering in the back of most people’s minds who are in a position to invest, knew what happened to [anonymized] and think it is going to happen again. (FE-14) Here, FE-14 explained the regional skepticism in startup activities as being due to an investment incident prior to the beginning of Start-Up Chile, in which substantial investment was made and lost on a glorified startup. This investment failure may have been attributed by investors to the lack of entrepreneurial knowledge on scaling Chilean startups. Such unfortunate incidents strengthened the negative perception of the local society toward startups’ potential and led to conditions unfavorable for the emergence and early development of an entrepreneurial ecosystem. The literature presents several arguments on the path-dependent nature of entrepreneurial ecosystems. For instance, Roundy et al. (2018) indicated the sensitivity to initial conditions of entrepreneurial ecosystems by applying the theory of complex adaptive systems, introduced in Section 2.1.4.4. The sensitivity to initial conditions refers to effects that small changes in the initial configuration of an entrepreneurial ecosystem can have on its later development (McKelvey, 2004). Adverse events, such as the failure of prominent startups, become embedded in the history of entrepreneurial ecosystems, constraining future behavior (Levin, 1998). To change such unfavorable conditions, Start-Up Chile took several measures to create a positive perception of startups among potential ecosystem stakeholders: (i) pushing success stories in local media and (ii) attracting international media coverage. First, local media has contributed to disseminating entrepreneurial success stories, even of those who are not directly involved in entrepreneurial

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activities in Chile. To create ecosystem dynamics, it is necessary that not only direct ecosystem actors but also the overall environment become supportive for startup activities. In other words, startup activities must gain social legitimacy (Frydrych, Bock, Kinder, & Koeck, 2014; Garud, Schildt, & Lant, 2014; Kibler et al., 2014). Start-Up Chile therefore preferentially allocated its resources to change the view on startups of potential but non-active ecosystem stakeholders by spreading entrepreneurial success stories of its participants via local media. Section 5.4.2.1 discussed the impact of both role models and their appearance on local media. Local media positively impacts not only potential entrepreneurial talent but also general public opinion. Start-Up Chile’s local public-relations activities gradually changed the societal perception of startup activities. Longtime active investor VC-2 summarized that With Start-Up Chile [ . . . ] the talent it brought and some of the success cases that brought it made it easier for people to start saying “Yeah, I want to be an angel investor. Yeah, I want to be an entrepreneur. Yeah, I want to devote my professional career to supporting the entrepreneur.” (VC-2) Second, the media presence of Start-Up Chile was not limited to domestic channels. International media has started reporting about a vast number of foreign entrepreneurs who decide to come to Chile to attend Start-Up Chile’s acceleration programs. International media leads to recognition of Start-Up Chile as a unique case, and Start-Up Chile, as well as the Santiago entrepreneurial ecosystem, has gained world attention. The growing international recognition of the Santiago entrepreneurial ecosystem changes the local mindset and culture. EE-8, the executive of a corporate accelerator, reflected on the early days and how Start-Up Chile was surprised by the growing attention it received from media, attention which led to the shift of some of Start-Up Chile resources towards structured public-relations activities. He reported how they planned to make a hub, [an] international hub, but I think when we created Start-Up Chile, nobody thinks that it will be so huge. Because it was really innovative. And then because of all this international attention probably. But it was not created in a moment, in the beginning, to think to get this PR, that was like “Oh, really? We are making this? Let us use it. Right? [ . . . ] The first and only article in the New York Times about Chile, in four years [ . . . ] was about Start-Up Chile. (EE-8) International media attention reduced obstacles for Start-Up Chile to connect to diverse potential stakeholders who previously stayed away from startup activities. The media reports on success stories of startups in Santiago and the growing attractiveness of the local ecosystem started to gradually convince an increasing number of stakeholders to believe in the potential of Santiago’s entrepreneurial activities and to reflect how they can possibly engage in the local entrepreneurial

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ecosystem to benefit from it. The Chilean entrepreneur and Startup Weekend–organizer CE-4 stated, Every time that you see that Santiago was one of the top-ten cities for entrepreneurship or one of the leading cities in innovation and people are starting to believe in it; it is not just a headline. (CE-4) Empirical data suggests that media was important to create legitimacy for StartUp Chile, and for startups in general, which played an important role in disseminating entrepreneurial culture within the Santiago ecosystem. Interestingly, the literature on entrepreneurial ecosystems has not paid explicit attention to the role of media in shaping regional entrepreneurial culture and influencing stakeholders’ coherence in approaching entrepreneurial activities. Yan and Guan (2019) conducted one of the few studies that cover media as a component of entrepreneurial ecosystems. They suggested that media coverage of entrepreneurial actors brings attention to the topic, which enhances knowledge-exchange mechanisms and spreads entrepreneurial culture. While both local and international media raised awareness of startups, one should not neglect the fact that traditional large corporations are also still hesitating to become more involved in the Santiago entrepreneurial ecosystem. It certainly takes time until established corporate players become active in supporting and collaborating with local startup activities. Nevertheless, this study observed that change was happening, and an increasing number of actors have been joining local startup activities. In this way, Start-Up Chile has continuously developed the existing ecosystem resources and kept the internal ecosystem dynamic running. RP11b: Local and international media reports activities of public accelerators, which enhances the visibility and legitimacy of startups activities and builds a positive perception of startups on the part of potential ecosystem stakeholders. 5.4.5 Creating Ecosystem-Level Social Capital The literature on entrepreneurial ecosystems commonly emphasizes the importance of connections and interactions within the ecosystem for the evolution of entrepreneurial ecosystems (Brown & Mason, 2017; Motoyama & Knowlton, 2017; Roundy et al., 2018; Spigel & Harrison, 2018). Consequently, one of StartUp Chile’s main goals is the formation of ecosystem-wide networks and connections to create social capital on the regional level. Empirical data suggests three actors with whom Start-Up Chile has created ecosystem-level social capital: political actors, local corporates, and investors. First, as a public organization, Start-Up Chile’s connections to political actors are vital. Producing visible results, such as success cases or the transformation of entrepreneurial education in universities, gradually increased Start-Up Chiles’s

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independence and secured significant public financial support, even in times of political change. To describe the political positioning of Start-Up Chile, one of the first Chilean Start-Up Chile participants and current university professor CE-3 labeled Start-Up Chile as a politically neutral, country-wide project: And Start-Up Chile was a project from the former president, it was from the right-wing party and then when becoming the left-wing party. They basically, they support the same party, so it was more than right- and leftwing parties, was more like a country project. (CE-3) The impartial social capital with political actors protected Start-Up Chile from the possible turbulence caused by political change and led to consistency in the development of the entrepreneurial ecosystem. This was key to the sustained growth of the Santiago ecosystem. Investor VC-2, who has been active in an entrepreneurial support organization within the ecosystem for more than a decade, recounts, The good thing, I think it has been definitely key to us grow in our ecosystem, is that it has not depended on political ideologies. At least not in the two governments we have had in the past three years. In 2010, it was a right-wing government, in 2012, yeah no, effectively it was 2013 when a new government was elected, which was kind of center-right, center-left, and they did not change the program. They actually encouraged them more. (VC-2) This continuous strong support from the policy side allowed Start-Up Chile to focus on building connections and creating social capital with other ecosystem stakeholders. Second, traditional businesses and large companies need interaction and persuasion to become an active part of the Start-Up Chile network. Therefore, numerous of Start-Up Chile’s social capital activities involve Chilean corporations. Start-Up Chile manager EE-4 explained how the intensive work of the past has created a brand within the corporate community that has begun to pay off: I mean, I think Start-Up Chile . . . it is in a stage right now, they can deliver value just because of the brand. So, we are able to attract the best people for free. I think that is the core of it. In the beginning, I think things should be like quite hard, but since last year, it is easier for us to send an email to a higher ranked . . . I do not know . . . CEO of a big company and they normally reply. So, I think that is part of the secret recipe that we have. (EE-4) Start-Up Chile mobilized its connections to corporates to gain access to their networks. For instance, Start-Up Chile’s introduction of a startup to a corporate often results in a domino effect, whereby the startup is further connected to other partner companies through the corporate. The two Start-Up Chile participants described this virtuous cycle of mutual social capital creation:

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I just had a really good meeting with a friend, actually a friend that [anonymized] from Start-Up Chile introduced me like one day before just by email. And we were just talking by WhatsApp, and we agreed on a meeting, and we met yesterday with beers and French fries. He will send me many contacts again for products, for everything for all the supplies that we need, for the laboratories and analysis that we need too. (FE-6) They introduce me to people; these people introduce me to more people and in this way, I started knowing a lot of people. (CE-2) In other cases, such mediation helps startups find new B2B customers. Start-Up Chile alumnus FE-1, who produces educationally oriented hardware products, shared his experience: When we were in the program, we were connected to an organization called [anonymized]. They actually train children in Chile like they help them find some new kind of . . . they train students on different levels to get some new skills. We had some really good talks with them. (FE-1) Third, one of the most valuable forms of social capital lies in Start-Up Chile’s connections to investors, for a nascent entrepreneurial ecosystem is characterized by a lack of funding sources for startups (Brown & Mason, 2017). Start-Up Chile constantly thrived, building social capital with individuals and organizations that have the potential to become investors. The staff often invites investors as jury members for events at Start-Up Chile or to become mentors for startups. The demo day at the end of the acceleration programs of Start-Up Chile presents the most interesting projects and startups on which participants worked. This is the most important event to bring investors to the accelerator. Foreign entrepreneur and Start-Up Chile alumnus FE-11 described how he met his investor at Start-Up Chile’s demo day: Our initial investors, they met us because they went to the demo day of Start-Up Chile. It is important to mention. I surely . . . the CEO of [anonymized] was one of the juries of that day. So that was [an] ignited relation. (FE-11) The number of connections among ecosystem actors, as well as the quality and frequency of their interactions, are important indicators for the maturity of entrepreneurial ecosystems (Brown & Mason, 2017). Connections and interactions create the social capital of the entrepreneurial ecosystem, which is the source of purposeful resource flow between ecosystem actors (Spigel & Harrison, 2018). Theodoraki et al. (2017) suggested that social capital enables the optimization of resources and reduces redundancies within the ecosystem. They furthermore argued that social capital strengthens unity among ecosystem stakeholders. This implies a positive effect of social capital on the coherence of ecosystem actors, which contributes to the emergence and resilience of an entrepreneurial ecosystem

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(Roundy et al., 2018). Start-Up Chile’s attempts to continually widen its networks and build ecosystem-wide social capital led to numerous dynamic interactions, which create the conditions of autopoiesis and adaptability in a complex adaptive entrepreneurial ecosystem (Roundy et al., 2018). Start-Up Chile has not only actively fostered the creation of social capital with ecosystem actors, but also profited from the increasing number of connections enjoyed by its participants. Their growing network with various ecosystem stakeholders collaboratively creates, shares, and develops the ecosystem’s resources. RP12: Public accelerators develop ecosystem-level entrepreneurial resources by creating social capital with a broad range of ecosystem stakeholders, such as policymakers, corporates, universities, and investors. 5.4.6 Summary of Developing Entrepreneurial Ecosystem Resources Section 5.4 presents five aggregated themes that this study inductively derived from empirical data regarding the coordination of the resource-flow within the entrepreneurial ecosystem: (i) Interactions between the accelerator and the ecosystem (Section 5.4.1), (ii) activating local talent (Section 5.4.2), (iii) transferring knowledge from the accelerator to the ecosystem (Section 5.4.3), (iv) creating an ecosystem-level entrepreneurial culture (Section 5.4.4), and (v) creating ecosystem social capital (Section 5.4.5).

Step 3: Development of Entrepreneurial Ecosystem Resources

Interactive Community

RP 12

RP 9-11

Entrepreneurial Ecosystem Other Stakeholder Public Accelerator

Participants

Accelerator Staff

Local Entrepreneurs

Resource Flow

3 RP 8

5.4 Developing Entrepreneurial Ecosystem Resources

Research Propositions RP8a: Public accelerators develop ecosystem-level entrepreneurial resources by facilitating the collaborative organization of startup-related events, which creates interactions between accelerator participants and various ecosystem stakeholders. RP8b: Public accelerators can facilitate diverse interactions between the accelerator and the ecosystem by obligating their participants to become actively involved in the ecosystem. RP8c: Public accelerators develop ecosystem resources by facilitating diverse sets of interactions between the accelerator and the ecosystem through the integration of ecosystem stakeholders into accelerator processes. RP9a: Public accelerators create accessible entrepreneurial role models, which are multiplied by media and enhance the perceived desirability of startups, serving to activate untapped local entrepreneurial talent. RP9b: Public accelerators develop existing ecosystem resources by building regional entrepreneurial confidence and supporting early-staged local entrepreneurs to overcome barriers. RP10a: Public accelerators nurture existing ecosystem resources by formally coordinating knowledge transfer from the accelerator to other ecosystem stakeholders, such as local support organizations or startups. RP10b: Public accelerators develop existing ecosystem resources by facilitating opportunities for informal knowledge transfer, such as the employment of local talent, or informal encounters of participants from the accelerator and other stakeholders of the ecosystem. RP11a: Public accelerators disseminate an entrepreneurial mindset to ecosystem stakeholders on multiple levels, which contributes to the creation and development of a coopetive entrepreneurial culture within the local ecosystem.

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5.4.2

5.4.3

5.4.4

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RP11b: Local and international media reports activities of public accelerators, which enhances the visibility and legitimacy of startups activities and builds a positive perception of startups on the part of potential ecosystem stakeholders. RP12: Public accelerators develop ecosystem-level entrepreneurial resources by creating social capital with a broad range of ecosystem stakeholders, such as policymakers, corporates, universities, and investors.

5.4.5

Figure 28: Summary of the Development of Entrepreneurial Ecosystem Resources

Ten research propositions were developed in this section. In this phase, the public accelerator starts coordinating the resource outside its organizational boundary. Figure 28 illustrates the developed causalities and summarizes the research propositions regarding the resource-flow coordination within the ecosystem. 5.5 Coordinating the Ecosystem Resource Flow The fourth phase of the accelerator-driven evolution of nascent entrepreneurial ecosystems is the coordination of ecosystem resource flow. Interview partners who have been engaged in the Santiago ecosystem, such as VC-1, EE-8, and VC2, suggested that there were only a few connections among ecosystem stakeholders before Start-Up Chile was initiated. In the accelerator’s first years, its strategic focus was on acquiring resources, integrating them into the accelerator, and developing them to nurture other ecosystem resources and stakeholders, as presented in Sections 5.2, 5.3, and 5.4. When Start-Up Chile became a central node in networks within the Santiago ecosystem, it began to use its social capital to connect different stakeholders to each other. Start-Up Chile used its reputation, legitimacy, and existing networks to activate and connect individuals and organizations that are potential resource providers within and outside the ecosystem. The emerging data structure of this coordination of ecosystems resource flows is presented in Figure 29. When Start-Up Chile was founded, it first concentrated on bringing resources to the Santiago entrepreneurial ecosystem and on integrating them into the accelerator (Sections 5.2 and 5.3). Start-Up Chile then began to build social capital with existing entrepreneurial actors in the ecosystem (Section 5.4). This was the basis on which they then began to coordinate the ecosystem resource flow.

5.5 Coordinating the Ecosystem Resource Flow First-Order Categories

Second-Order Categories

205 Aggregated Dimensions Section 5.5.1

• Explain new stakeholders the activities of other actors • Show new stakeholders possibilities to engage

Help new stakeholders navigate the entrepreneurial ecosystem

• Facilitate opportunities for new stakeholders to build networks • Integrating new stakeholders into wider ecosystem

Connecting new stakeholders with actors that are beneficial for them

• Engage in associations • Creation of investors club

Building platforms for stakeholders with same backgrounds

• Events that bring different ecosystem stakeholder together • Make purposeful introductions

Connecting ecosystem stakeholders with different backgrounds

Activating and encouraging new stakeholders

Section 5.5.2

Connecting entrepreneurial ecosystem stakeholders

Section 5.5.3 • Connecting stakeholders with alumni network • Establishing worldwide network with other ecosystems • Establishing network of partners worldwide that encourage startups to apply to Start-Up Chile • Involving international partners in mentoring activities • Utilizing the worldwide network to help alumni migrate to other ecosystems

Connect global networks to local ecosystem stakeholders Facilitating global resource exchange

Connecting the entrepreneurial ecosystem to the world

Figure 29: Data Structure of Coordinating the Ecosystem Resource Flow

Empirical data suggests that Start-Up Chile coordinated the resource flow in the Santiago entrepreneurial ecosystem in three ways. First, new stakeholders were encouraged to become active in the entrepreneurial ecosystem. Second, new stakeholders were connected to already active stakeholders, who integrated them into ecosystem-wide networks. Third, Start-Up Chile connected ecosystem stakeholders to the world by granting them access to its global network. Literature suggests that such extensive efforts to coordinate the ecosystem-wide resource flow are necessary to build stable structures that ensure the sustainable development of functional and resilient entrepreneurial ecosystems (Spigel & Harrison, 2018). 5.5.1 Activating and Integrating Passive or New Ecosystem Stakeholders This section explains how Start-Up Chile activated and encouraged passive or new ecosystem actors, by integrating them into the ecosystem and by bridging new and extant stakeholders. While Start-Up Chile has made significant contributions to connect existing stakeholders, there are still numerous actors who could play essential roles in supporting regional startup activities but currently have little or no connections to the dynamics of the Santiago ecosystem. Involving such actors is essential to move on to the next evolutionary stage of the entrepreneurial ecosystem.

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Start-Up Chile encouraged these passive actors, who had not been involved in ecosystem dynamics, to become more active. Such potential stakeholders are often not aware of the growing entrepreneurial ecosystem in Santiago. Furthermore, it is often unclear to such passive actors whether and how the local entrepreneurial ecosystem could be used for their own strategic goals and activities. Therefore, Start-Up Chile needed to interpret and translate the reality, structural overview, and potential of the emerging startup scene for potential stakeholders to whom the underlying entrepreneurial culture or ecosystem dynamics is something new. Traditional corporates, for instance, hardly saw any connections between startups’ entrepreneurial activities and their own business fields before Start-Up Chile took active ameliorative measures. Investor VC-2, who had been involved in entrepreneurial activities even before Start-Up Chile was launched, summarized the initial situation and the development after the initiation of Start-Up Chile: This is, strictly speaking, a very young startup ecosystem. [ . . . ] We have an ecosystem that has been starting to get known outside and even inside Chile for just seven years. This whole business started in 2010, I would say probably with the Start-Up Chile program [ . . . ] that kind of set us on a different path. [ . . . ] But yes, from 2010 up until 2017, many things have changed. First of all, the agents in this ecosystem have flourished. Probably in 2010, nobody actually knew or have heard before of a business incubator or accelerator. [ . . . ] And right now, there are at least thirteen business accelerators or incubators [ . . . ] you did not see that in 2012 or earlier. Like entrepreneurship was . . . I would argue that the term was not even used. It did not have any connotation because it was not even used. So, the psyche or the mentality of Chileans has changed a lot towards entrepreneurship. The actual things that make it happen have also changed a lot in the sense that there are incubators. There are co-works. There are even VC funds. (VC-2) When new stakeholders become active in the entrepreneurial ecosystem, it is important to help them navigate it, since they are not familiar with its structure, players, and underlying value. Start-Up Chile’s efforts to integrate such ecosystem outsiders into the ecosystem enabled the latter to see the value of startup engagement and to become a vital part of the ecosystem. Not only did Start-Up Chile demonstrate the benefits and overview of the Santiago ecosystem, it also functioned as a door opener, purposefully introducing passive stakeholders to active entrepreneurs and support organizations in its ecosystemwide network. VC-3, a successful businessman who recently became an active business angel, described how easy it was for him to become involved in the ecosystem with the help of Start-Up Chile:

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I had [an] interaction with Start-Up Chile. [ . . . ] So, I think it was easy. It is still very easy. If you want to join Chile Growth Angels, if you want to go to demo day from Start-Up Chile, if you want to go to an event, you can do that. (VC-3) Over the years, Start-Up Chile has developed a systematic approach to integrating the resources of new stakeholders into the ecosystem based on their integration experience with regard to numerous foreign entrepreneurs who participated in the program. By facilitating this integration process, the accelerator accumulated the knowledge required to bridge different actors who can help each other. Former accelerator manager EE-7 described Start-Up Chile’s role in a nutshell: Because Start-Up Chile was at that point and still is kind [of] . . . one of the main actors in the ecosystem and it is kind of a door to all things. (EE7) The activation of new ecosystem stakeholders, such as corporates or universities, has been crucial for the development of the Santiago ecosystem. Universities, for instance, supply the local ecosystem with human capital and technology, which naturally makes them important actors, even without further engagement in entrepreneurial activities (Brown & Mason, 2017; Colombelli et al., 2019; Ghio, Guerini, & Rossi-Lamastra, 2017; Spigel & Harrison, 2018). However, their impact on ecosystem development can be more explicit and significant when they proactively take startup-related actions, for example, motivating students to become entrepreneurs and creating environments in which to explore and exploit opportunities (Colombelli et al., 2019; Ghio et al., 2017). For this reason, Start-Up Chile helped local stakeholders engage in entrepreneurial activities so that more stakeholders can contribute to the evolutionary dynamics of the ecosystem. This not only encouraged them to stay active but also helped them gain legitimacy and become integrated into the networks so that they can become a part of resource flow within the ecosystem. RP13: Public accelerators navigate and connect new or passive regional actors to the entrepreneurial ecosystem to support them in becoming a part of ecosystem networks, which results in the coordination of ecosystem resource flows. 5.5.2 Connecting Ecosystem Stakeholders with Each Other One core activity of Start-Up Chile’s resource coordination is its facilitation of connections among ecosystem stakeholders: Start-Up Chile is eager to continually build and strengthen connections to various ecosystem actors (Section 5.4.5). This social capital is used to connect entrepreneurial ecosystem stakeholders with each other. Ecosystem dynamics are constrained as long as there are only limited interactions among stakeholders independent of Start-Up Chile’s efforts. The more

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connected ecosystem-wide entrepreneurial actors are, the easier it is for startups to gain access to ecosystem-level entrepreneurial resources (Spigel & Harrison, 2018). The connection of stakeholders with each other positively increases ecosystem dynamics and leads to knowledge sharing and mutually beneficial cooperation. Start-Up Chile connected ecosystem stakeholders by supporting the creation of ecosystem-wide platforms to connect stakeholders of the same industry and by connecting stakeholders with different backgrounds through activities such as events. Start-Up Chile initiated or supported several platforms to connect stakeholders with similar interests and in similar industries. Although the Santiago ecosystem remains rather small, the overall attitude of stakeholders of the same industry is more driven by competition than collaboration. In particular, entrepreneurial support organizations compete for entrepreneurs and subsidies. Start-Up Chile tries to bring these stakeholders together, to which end it uses its own broad network, as Start-Up Chile manager EE-4 explains, referring to the Scale program, which is well connected to other support organizations: Scale is already related to any incubator in Chile; it could be private, I mean the public or whatever, it could be NGOs. (EE-4) Similarly, Start-Up Chile created a platform for investors, the so-called Investors Club. Former accelerator manager EE-7 stated that Start-Up Chile created these connections to increase investor activity in the entrepreneurial ecosystem: And then how do we get Chilean investors more involved, so an InvestorClub was created. (EE-7) These connections among ecosystem stakeholders of the same interest are valuable, as they improve the overall resource base of the ecosystem by allowing best practices and network access that is specific to particular interests to be shared. The literature on knowledge management also suggests that shared vision and similar backgrounds are positively associated with the quantity and quality of knowledge sharing (Chiu et al., 2006; Huber, 2001). Ecosystem-wide connections within the same field are valuable, but stronger ecosystem dynamics emerge when the interactions and actors are diversified, which can be achieved by creating connections between different stakeholder groups (Spigel, 2017). A resilient entrepreneurial ecosystem is specifically characterized by intensive stakeholder interaction and robust networks that contain actors from diverse backgrounds (Brown & Mason, 2017). Start-Up Chile facilitates these connections primarily through networking activities, such as events. Start-Up Chile has an employee who is responsible specifically for the corporate network: [Anonymized] is part of the acceleration team. She is in charge of the business network and the corporate network that we have. (EE-4) During these events, Start-Up Chile’s staff transfers some explicit knowledge about the entrepreneurial process or particular methods to the attendees, or

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startups, which participate acceleration programs, pitch their business idea, and the event later opens the floor for networking: They do every once a month a Tech Evening, where they invite investors from the region for the topic of security they gonna file for ten startups to pitch the ideas they are trying to get many investors they can [ . . . ] they try to invite people from the industries, so they have brought [ . . . ] together in the networking event like these kinds of things. (EE-3) This strong network guarantees smooth coordination of the resource flow within the entrepreneurial ecosystem. One of the first managers of Start-Up Chile, VC-1, explained their reasoning in a nutshell: Not just knowing the right people and having access to them but creating the spaces for people to meet. (VC-1) Start-Up Chile successfully established a number of such occasions for different stakeholder groups to offer opportunities to get in touch with each other. By doing so, Start-Up Chile worked as a bridge to close the structural holes (Ahuja, 2000; Burt, 1992) within the ecosystem-wide networks. These information gaps between groups of stakeholders can inhibit the coherence of entrepreneurial activity, which hampers the emergence and development of an entrepreneurial ecosystem (Burt, 1992; Roundy et al., 2018). Therefore, filling these gaps leads to better information flow within the ecosystem, which strengthens the entrepreneurial activities of various stakeholders. This is in line with the findings of Theodoraki et al. (2017), which suggest that social capital strengthens the unity among ecosystem stakeholders and optimizes the use of resources. By creating and supporting platforms to facilitate various interactions among ecosystem stakeholders, Start-Up Chile has tried to transform ecosystem-level networks from the anchor organization–centered network to heterarchical networks with diverse types of interactions. This was intended to create networks outside Start-Up Chile and reduce the dependency of ecosystem networks on just a few actors. This would allow Start-Up Chile to coordinate the flow of ecosystem resources through various channels, increasing the evolutionary dynamics of the Santiago ecosystem. RP14: Public accelerators coordinate the flow of existing ecosystem resources by establishing connections within certain actor groups and among ecosystem stakeholder groups. 5.5.3 Connecting the Entrepreneurial Ecosystem to the World Well-developed entrepreneurial ecosystems are characterized by their strong, broad connections to other entrepreneurial ecosystems around the world (Brown & Mason, 2017). The global interconnectedness provides its stakeholders with

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opportunities to acquire resources from outside the local entrepreneurial ecosystem, to engage in global partnerships, and to serve global markets. Start-Up Chile focused on advancing the global connectedness of Santiago by incentivizing entrepreneurs from all around the world to relocate their startups for a certain time to get engaged in the Santiago entrepreneurial ecosystem: The “what” was entrepreneurs, but the “why” was, you know, connecting Chile to the world. (EE-5) Over time, Start-Up Chile integrated resources from hundreds of foreign entrepreneurs into the acceleration program and mobilized them to develop local ecosystem resources. These foreign entrepreneurs also enhanced the global connectivity of the Santiago entrepreneurial ecosystem. The growing alumni network offered opportunities to grow Start-Up Chile’s network in other ecosystems worldwide, which has helped Start-Up Chile acquire even more resources from outside the ecosystem, as the CORFO manager GV-1 explained: We have a lot of people who participated in the program who are now all the world, all the places. They go back to their countries, and when we open the application process, they do . . . like . . . they are like an ambassador in the country. (GV-1) Empirical data suggests that Start-Up Chile has actively connected the Santiago ecosystem to the world by integrating local stakeholders into its global network and by actively facilitating global resources exchanges between the Santiago ecosystem and other ecosystems worldwide. 5.5.3.1 Establishing Global Networks During its initial years, Start-Up Chile used its growing global network predominantly for own purposes, such as attracting more and better foreign entrepreneurs to its acceleration programs or connecting their participants to investors from abroad. When Start-Up Chile began to become more active as a coordinator of the ecosystem resource flow, it began to purposefully mobilize its global network in the interest of ecosystem development, through (i) an alumni network and (ii) a global network with support organizations. The constantly growing alumni network is the backbone of Start-Up Chile’s global connectedness. Two alumni, FE-2 and FE-1, described the strength and value of this network: That is not only for each generation, but it is a global one and, yeah, it is a huge network you can imagine if there were two intakes every year off about 80 or 90 startups [ . . . ] a lot of people are connected now through this program. (FE-2) Yes, like whenever, for example, whenever we have some challenges that we face probably if I need some help in China, I connect with someone. I

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will ask them alumni network guys “Do you guys know anyone?” During the competitions, we all support each other very well. (FE-1) Start-Up Chile gradually expanded its global network by including support organizations and companies from local and foreign entrepreneurial ecosystems. After a few years, Start-Up Chile systematically began to integrate local ecosystem stakeholders into this global network, thus purposefully facilitating a broad variety of cross-border partnerships: We have ambassadors in a lot of countries. So, if you say “I want to go to Colombia,” then we say, ok, in Medellin and Bogota, we have both ambassadors so you can go there and talk to them and meet them. We have a list of accelerators, and we have a list of lawyers and all this stuff we have partnerships that can give you a discount. (EE-3) The creation and growth of its global network have been an integral part of StartUp Chile’s strategy for supporting the development of the Santiago entrepreneurial ecosystem. Start-Up Chile created what Zanfei (2000) calls a double network, referring to the parallel development of internal networks and external networks with individuals and organizations outside of the ecosystem. Start-Up Chile acts similar to multinational corporations that “develop both internal webs interconnecting the innovative activities of a growing number of affiliates located in different countries; and external networks through which these affiliates set up linkages with foreign firms and institutions to further exploit their knowledge assets and gain access to local resources” (Castellani & Zanfei, 2006, p. 2). These efforts on the part of Start-Up Chile to deliberately create transnational ties between Santiago and other entrepreneurial ecosystems around the world are unique. The literature has introduced some empirical cases in which interconnectedness among entrepreneurial ecosystems in different countries emerges naturally through the migration of entrepreneurs (Baron & Harima, 2019; Kenney, Breznitz, & Murphree, 2013; Saxenian, 2002; Saxenian & Hsu, 2001). However, how anchor organizations purposefully facilitate such global connections and how these connections influence the development of entrepreneurial ecosystems remain largely unknown. The integration of local ecosystem stakeholders into global networks allowed Start-Up Chile to coordinate mutually beneficial resource flows between international entrepreneurial ecosystems, which support local stakeholders in their activities to either acquire resources from abroad or to enter foreign markets. RP15a: Public accelerators coordinate the flow of existing ecosystem resources by creating global networks, which facilitate opportunities for local entrepreneurs and ecosystem stakeholders to engage in global partnerships and to serve global markets.

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5.5.3.2 Facilitating Global Resource Exchange Empirical data suggests that Start-Up Chile is actively facilitating resource exchanges between the Santiago ecosystem and other entrepreneurial ecosystems worldwide by establishing a network of partners worldwide that encourage local startups to apply for Start-Up Chile’s programs, by involving partners from abroad in mentoring activities in Chile, and by using their worldwide network to help Start-Up alumni to migrate to other entrepreneurial ecosystems. Start-Up Chile uses its worldwide connections to fill resource gaps and facilitate global resource exchange between the Santiago ecosystem and entrepreneurial actors around the world. To this end, Start-Up Chile created a worldwide partner network that is specifically oriented towards resource transfers: They have two kinds of partners. There are partners who are working for the entry funnel, so they are helping with getting startups to Chile. So, a lot of more incubators say like “we have this startup maybe they fit your program” and then they recommend it. Alternatively, we have partners where after like someone finishes with Start-Up Chile and, for example, Seed and they want to go to another country these are the partners we can recommend them to. So, it is both ways: recommendation for Start-Up Chile and Start-Up Chile’s [recommendations]to others. (EE-3) Apart from such win-win partnerships, Start-Up Chile has connections to worldwide companies of different industries. This helps facilitate resource exchanges through the creation of new partnerships between local and global entrepreneurial actors. In this way, local startups get access to global suppliers or international customers through Start-Up Chile’s networks. Start-Up Chile also cultivates relationships with various well-connected individuals from abroad through global mentorship networks. Their knowledge helps startups from Chile better understand overseas market dynamics. These individuals often have an entrepreneurial background and share their knowledge and network as mentors with their mentees. The serial entrepreneur and Start-Up Chile participant FE-10 described how his mentor from the US offered him a wide range of contacts, which perfectly fit into his business development strategy: So, one is actually back in the US, and that was what they called the first alternative mentor. And I compliment them on this . . . he is back in Southern California, but not only is he back in Southern California. He is a super young guy, but he works with the big global well-funded Silicon Valley startup organization called [anonymized], which is like this global platform. And they partner with all the startup ecosystem players and universities and governments around the world. And so, it is the perfect setup for business development for us. (FE-10)

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Most interactions between stakeholders in the Santiago entrepreneurial ecosystem and Start-Up Chile’s global network facilitate resource exchanges and deepen and expand the overall network. By doing so, they can offer help that is specifically tailored to the needs of Chilean ecosystem actors who seek global opportunities. Third, the diverse and far-reaching global partnerships of Start-Up Chile can support local entrepreneurs who intend to expand their business to new markets and to visit other countries to expand their human and social capital. Start-Up Chile called this particular network that aims at helping startups going abroad as a “softlanding network”: We now created a soft-landing network. So, if entrepreneurs from Chile want to go to another country, for example, Mexico, Colombia, whatever, it is really hard for them because of the different cultures you have just like the disadvantages of foreigners. So, you really do not know anyone, so it is really hard to set foot in the door. So that is why you go to organizations, and they help you with contacts. So, this is what I did basically for the half-year trying to establish networks. I did interviews with many entrepreneurs asking them what they actually need is it more contacts, like, for example, press, or do they need more like someone who actually has to do counting or something cause its different in every country and then I like evaluated all of this, and based on this I was looking for partners. (EE-3) As suggested in this quote, Start-Up Chile actively coordinates the resource inflow and outflow of the Santiago entrepreneurial ecosystem, and its global network help to form win-win partnerships around the world. In this way, Start-Up Chile can facilitate a variety of resource exchanges between local ecosystem stakeholders and resource providers worldwide. Bathelt, Malmberg, and Maskell (2004) suggested that “knowledge pipelines” to individuals and organizations outside the region are as important as knowledge-sharing connections among regional actors. The resources, such as unique knowledge, from outside the own ecosystem expand and diversify the overall knowledge pool, which provides local firms with competitive advantages (Bathelt et al., 2004). Such resource injections into the regional ecosystem can induce new stakeholder behaviors that ultimately result in strengthened emergent behavior in the overall ecosystem (Roundy et al., 2018). RP15b: Public accelerators coordinate the flow of existing ecosystem resources by facilitating global resource exchanges between the local ecosystem and other ecosystems worldwide. 5.5.4 Summary of the Coordination of Ecosystem Resource Flow Section 5.5 illuminated how a public accelerator coordinates the flow of ecosystem resources.

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Step 4: Coordination of Ecosystem Resource Flow RP 15

Foreign entrepreneurial ecosystems

RP 14 Interactive Community Entrepreneurial Ecosystem

4

RP 13

Other Stakeholder Public Accelerator Participants

Accelerator staff

Resource flow

Research Propositions RP13: Public accelerators navigate and connect new or passive regional actors to the entrepreneurial ecosystem to support them in becoming a part of ecosystem networks, which results in the coordination of ecosystem resource flows. RP14: Public accelerators coordinate the flow of existing ecosystem resources by establishing connections within certain actor groups and among ecosystem stakeholder groups. RP15a: Public accelerators coordinate the flow of existing ecosystem resources by creating global networks, which facilitate opportunities for local entrepreneurs

Section 5.5.1

5.5.2

5.5.3

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and ecosystem stakeholders to engage in global partnerships and to serve global markets. RP15b: Public accelerators coordinate the flow of existing ecosystem resources by facilitating global resource exchanges between the local ecosystem and other ecosystems worldwide. Figure 30: Summary of the Coordination of Ecosystem Resource Flow

In this stage, the public accelerator is no longer a central actor of ecosystem evolution, and the role of anchor tenants therefore is transformed from a central actor to one of the active agents who influence the resource flow within the ecosystem. This study identified three aggregated themes: (i) activating and integrating passive or new stakeholders (Section 5.5.1), (ii) connecting ecosystem stakeholders with each other (Section 5.5.2), and (iii) connecting the entrepreneurial ecosystem to the world (Section 5.5.3). Figure 30 visualizes the changing roles of a public accelerator as an anchor tenant, and lists four research propositions developed in Section 5.5 5.6 Facilitating Entrepreneurial Ecosystem Resource Recycling While the Santiago entrepreneurial ecosystem has grown rapidly in the recent decade, it still strongly depends on the economic development agency CORFO and on the anchor organization Start-Up Chile. Interviewees generally agreed that Santiago has not yet become a sustainable and resilient entrepreneurial ecosystem. An essential step to realize the ecosystem’s sustainability is so-called entrepreneurial recycling, in which experienced entrepreneurs reuse and reinvest entrepreneurial resources from former startups for the further development of the ecosystem by investing in new projects (Bahrami & Evans, 1995; Brown & Mason, 2017; Mason & Harrison, 2006; Spigel & Harrison, 2018). Empirical data suggests that Start-Up Chile is facilitating the still-underdeveloped recycling of three kind of resources: entrepreneurial knowledge, social capital, and financial capital. The emerging data structure is visualized in Figure 31.

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Second-Order Categories

Aggregated Dimensions Section 5.6

• Alumni involved in mentoring activities • Alumni give workshops • Alumni provide startups with entrepreneurial knowledge • Alumni help startups to turn knowledge into competencies

Integrate successful entrepreneurs into accelerator processes Facilitate knowledge spillover from successful entrepreneurs

Facilitating knowledge recycling

Section 5.6 • Alumni help local startups with contacts • Alumni give local startups networking advice

• Alumni connect stakeholders • Alumni build platforms for other stakeholders to meet

Utilize networks of successful entrepreneurs Successful entrepreneurs provide new stakeholders network access

Facilitating social capital recycling

Section 5.6 • Alumni invest small sums of smart money in startups • Alumni actively participate in business angel network

• Alumni recycle financial capital through VC • Former staff recycles knowledge through VC

Individual investments into startups

Institutionalization of investments into startups

Facilitating financial capital recycling

Figure 31: Data Structure of Facilitating Entrepreneurial Ecosystem Resource Recycling

First, knowledge recycling is mainly driven by integrating former Start-Up Chile participants who made successful exits into the accelerator processes of Start-Up Chile. Failed entrepreneurs also have potential, in fact, to be the best teachers in entrepreneurship for future generations. They also give valuable input to how support programs, such as accelerators, can be improved to offer more effective measures and services than today. One empirical example was Start-Up Chile’s recent hire of one of its former participants who had to shut down her business. Serial entrepreneur and Start-Up Chile participant FE-10 reported: I will choose a mid-level person staff-wise, by hiring [anonymized]. And I said this to the executive staff [ . . . ] they can somehow figure out a way to replicate that hiring model. That starts to give . . . take some of the power back [ . . . anonymized] started a company and failed only a year and a half ago, right. Now, this is a great job because she loves entrepreneurialism; she loves innovation; she wants to be a part of the community and change and help her country evolve. (FE-10) Start-Up Chile mobilized the resources of other former entrepreneurs by integrating them as mentors into the accelerator program. In this way, their unique entrepreneurial knowledge can be recycled and applied to new startups. Foreign entrepreneur and Start-Up Chile participant FE-10 described one of his mentors: He is a formerly successful, two-time SAS [software-as-a-service] founder, who is more of an engineer coder type than I am but is not an engineer

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coder, right. I mean he is more than I am but that is not hard to do. But he is a business guy, he is a business thinker, and he is a relationship guy. And so, in that sense, like, the amount of knowledge that he has transferred to me has been hugely valuable and excessing our product progress at the time. (FE-10) Former entrepreneurs who become mentors often recycle not only their knowledge, but also their social capital by giving their mentees access to their network. Start-Up Chile has actively tried to harness the networks of former entrepreneurs to make them accessible to the entire entrepreneurial ecosystem. It uses its own network to help former entrepreneurs in their efforts to become dealmakers. Dealmakers refer to individuals who are often former entrepreneurs and can use their substantial social capital and broad networks to enhance the resource flow of the ecosystem (Feldman & Zoller, 2012; Napier & Hansen, 2011). In informal talks with entrepreneurs at the coworking space, some of them mentioned valuable contributions from dealmakers, who introduced entrepreneurs to critical contacts, for instance, to manufacturers and VCs. Dealmakers create a winwin situation for both entrepreneurs and ecosystem stakeholders by reducing transaction costs (Feldman & Zoller, 2012; Williamson, 1979). A personal introduction from those who have established trust relationships with stakeholders can provide entrepreneurs with legitimacy and trust, smoothing transaction processes. Empirical data has demonstrated that some former Start-Up Chile participants were recycling financial capital. Resource recyclers who re-invest their financial capital to foster future entrepreneurial talent can be divided into two groups, the first of which builds its own support organizations. Together with a former StartUp Chile participant, former Start-Up Chile manager VC-1 founded one of the most active VC in the Chilean ecosystem: Right now, we are recognized as the most active funds in Latin America by the Latin America VC association . . . we are being in all of the news, not only in Chile but in several countries. I mean, in the VC association of Chile, which is just founded like a month ago, like I said [to] you, in the beginning . . . they need us because they know, and everybody agrees that Magma has been doing things that should have been done three years ago. (VC-1) Other former entrepreneurs decided to invest their money individually. Start-Up Chile helps these new business angels integrate into the ecosystem, which leads them to gain meaningful experience building their competence as investors. StartUp Chile participant FE-10, who has built a mentoring platform, described this new type of investor as follows: There is this other group of people who have started up their own little funds, right, with private money or without, and they eventually did it

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because . . . maybe they were former entrepreneurs who came through Start-Up Chile, which I know one is in exactly that category. From many generations ago or they have been a part of the Chilean ecosystem long enough to know. (FE-10) The recycling of entrepreneurial resources a core process in well-developed entrepreneurial ecosystems (Spigel & Harrison, 2018). This re-integration of resources, such as financial capital or knowledge of successful entrepreneurs and startups, is the driver of the ecosystem’s long-term sustainability (Mason & Harrison, 2006). Nascent entrepreneurial ecosystems lack visible success stories, which consequently limits their resource recycling to smaller projects (Brown & Mason, 2017; Spigel & Harrison, 2018). The ecosystem-level cultural capital, which entrepreneurs develop together with other ecosystem actors, supports resource recycling (Brown & Mason, 2017). In this environment, anchor organizations that facilitate recycling processes are especially important. Rickles et al. (2007) proposed that recycling processes are fundamental properties of complex systems, since “the output of some process within the system is ‘recycled’ and becomes a new input for the system” (p. 935). This feedback loop occurs at all levels of the system, which creates co-evolution as system components shape their environment and are influenced by their environment at the same time (Rickles et al., 2007). While empirical evidence shows some signs of (potential) resource recycling, which is predominantly facilitated by Start-Up Chile, the scale of overall entrepreneurial recycling within the Santiago entrepreneurial ecosystem is rather limited. What was observable was that the above-mentioned activities of Start-Up Chile could create some role models for resource recycling in the Santiago ecosystem. The active support of the re-integration of knowledge, social capital, and financial capital is vital for the long-term goal of creating a sustainable ecosystem. RP16: Public accelerators facilitate resource recycling within the ecosystem by supporting the reintegration of knowledge, social capital, and financial capital of entrepreneurs who sold or shut down their businesses. The facilitation of ecosystem resource recycling is summarized in Figure 32.

5.7 Summary of the Results

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Step 5: Facilitation of Entrepreneurial Ecosystem Resource Recycling Foreign entrepreneurial ecosystems

RP 16 Interactive Community Entrepreneurial Ecosystem

5

Other Stakeholder Public Accelerator Participants

Accelerator staff Resource flow

Research Propositions RP16: Public accelerators facilitate resource recycling within the ecosystem by supporting the reintegration of knowledge, social capital, and financial capital of entrepreneurs who sold or shut down their businesses.

Section 5.6

Figure 32: Summary Facilitation of Entrepreneurial Ecosystem Recycling

5.7 Summary of the Results Chapter 5 developed a large set of research propositions by identifying five critical ways in which a public accelerator, as an anchor tenant, influences the early evolution of an entrepreneurial ecosystem by orchestrating its resources: (i) acquiring resources from outside the ecosystem (Section 5.2), (ii) integrating and accumulating acquired resources in the accelerator (Section 5.3), (iii) developing entrepreneurial ecosystem resources (Section 5.4), (iv) coordinating the ecosystem resource flow (Section 5.5), and (v) facilitating entrepreneurial ecosystem resource

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recycling (Section 5.6). Figure 33 illustrates an overview of all the research propostiions developed in Chapter 5. 9 3 2 1

10

Acquisition of Resources

16

12

8 Development of Ecosystem Resources

4

5

11

Resource Integration and Development

Facilitation of Resource Recycling

14

7

Coordination of Resource Flow 15

6 13

Figure 33: Continuous Cycle of Ecosystem Evolution

#

Research Propositions

6 Discussion This chapter elaborates on the research contributions of this study by summarizing key findings, which answer the research questions and fill in the research gaps identified in Section 2.3. Section 6.1 presents a research synopsis by highlighting research gaps that this study addresses and summarizing the approach of this study. Section 6.2 summarizes how this study serves the answer to research questions determined in Section 1.3 by elaborating research implications of this research. 6.1 Research Synopsis As discussed in Section 2.3.1, research on entrepreneurial ecosystems remains in its infancy and has been criticized for the static nature of its frameworks (Alvedalen & Boschma, 2017; Colombo, Dagnino, Lehmann, & Salmador, 2019; Stam, 2015). One possible reason for the latter is that many early studies were conducted based on mature entrepreneurial ecosystems, such as Silicon Valley (Saxenian, 1994, 2002), Berlin (Baron & Harima, 2019), or Waterloo (Spigel, 2017). While such well-developed entrepreneurial ecosystems offer rich insights into the mechanisms according to which a mature ecosystem functions, it generates limited knowledge on the emergence of an entrepreneurial ecosystem. Questions, such as how entrepreneurial ecosystems emerge, transform, and develop over time remain mostly unanswered (Alvedalen & Boschma, 2017; Brown & Mason, 2017; Colombelli et al., 2019; Spigel, 2017). Therefore, scholars have called for rigorous research on the importance and transforming role of interdependent ecosystem components to better understand how internal and external factors configure and develop the ecosystem over time (Colombelli et al., 2019; Spigel & Harrison, 2018). Several pioneer studies have investigated the evolutionary nature of entrepreneurial ecosystems (Brown & Mason, 2017; Colombelli et al., 2019; Mack & Mayer, 2016; Spigel & Harrison, 2018), but what is notably missing is understanding of the early evolution of nascent entrepreneurial ecosystems. Current literature provides limited understandings on how entrepreneurial ecosystems emerge within a region and how they gain initial evolutionary momentum. This study tackles this research gap by paying particular attention to the roles of entrepreneurial resources. Previous studies describe nascent entrepreneurial ecosystems as regions with scarce entrepreneurial resources and limited interactions to disseminate and multiply the few available resources (Brown & Mason, 2017; Colombelli et al., 2019; Mack & Mayer, 2016; Spigel & Harrison, 2018). Researchers have emphasized the importance of the availability and accessibility of entrepreneurial resources for the early development of entrepreneurial ecosystems (e.g., Spigel & © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020 J. Harima, Public Accelerators in Entrepreneurial Ecosystems, https://doi.org/10.1007/978-3-658-31655-6_6

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Harrison, 2018). These arguments legitimate the necessity of this study to understand the early development and progress of entrepreneurial ecosystems as a process in which a region enhances its resource base and resource flow. Against this background, this study selected Santiago de Chile as an empirical location. This location is particularly interesting because the ecosystem did not have favorable conditions with regard to its resource base but made significant steps to enrich it by acquiring resources from outside, which was done by attracting foreign entrepreneurs from more mature entrepreneurial ecosystems worldwide. Entrepreneurs in well-developed entrepreneurial ecosystems often possess both human and social capital, which are not yet available in a nascent entrepreneurial ecosystem. This enabled a more fine-grained analysis of the early evolution of nascent entrepreneurial ecosystems, with more detailed findings on different phases of development. Empirical insights from the Santiago entrepreneurial ecosystem demonstrate how a region that does not necessarily have favorable initial conditions and entrepreneurial resources gains evolutionary momentum to develop its entrepreneurial ecosystem. The Chilean economy heavily relied on the primary sector, such as mining (“Worldbank Country Snapshot Chile,” 2017), and this focus on existing industries hindered the country from pursuing innovative entrepreneurial activities (Mandakovic et al. 2015; Romaní, et al., 2018). According to interviewees, the Santiago entrepreneurial ecosystem was virtually non-existent a decade ago, even though Chilean governments had proactively implemented various policy instruments to support entrepreneurial activities. The startup scene in Santiago was characterized by the lack of entrepreneurial resources and by under-developed linkages among ecosystem stakeholders (Klerkx et al., 2015). The ecosystem’s development, however, gained momentum when it started to proactively attract foreign entrepreneurs through the Start-Up Chile program, from 2010 onwards. The findings presented in Chapter 5 demonstrate which types of resources a nascent entrepreneurial ecosystem acquires by attracting foreign entrepreneurs and how it combines external resources with local ones. The results of this study show the process of resource enrichment within the region by the multiplication and diversification of available resources within the region, thereby developing the Santiago ecosystem. This study uses resource perspectives and complex adaptive system theory (Roundy et al., 2018) to understand entrepreneurial ecosystems, their open but distinct boundaries, and their non-linear dynamics that drive the overall evolution. Their nature as open systems allows for both resource inflow and outflow (Spigel & Harrison, 2018), processes that are similar to brain gain and brain drain (Bhagwati & Hamada, 1974; Stark, Helmenstein, & Prskawetz, 1997; Tung & Lazarova, 2006). In literature, one can find many examples of entrepreneurial actors who move from one ecosystem to another, creating such resource flows (Dai

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& Liu, 2009; Kenney et al., 2013; Qin, Wright, & Gao, 2017). In the observed case in Chile, policymakers artificially created resource inflow by offering attractive conditions for foreign entrepreneurs to stay in Santiago for a limited amount of time. 6.2 Research Contributions Previous research on the evolution of entrepreneurial ecosystems suggests that some individuals or organizations exert more influence on their surrounding ecosystems than others (Brown & Mason, 2017; Colombelli et al., 2019; Feldman & Zoller, 2012; Spigel & Harrison, 2018). These so-called anchor tenants are central ecosystem stakeholders and are characterized by their central position in ecosystem-wide networks and their possession of valuable resources, which they make accessible to other ecosystem actors (Feldman & Zoller, 2012; Spigel & Harrison, 2018). Colombelli et al. (2019) analyzed the role of anchor tenants in governance structures in entrepreneurial ecosystems. They proposed that the governance structure of entrepreneurial ecosystems changes over time, from a hierarchical design with a dominant anchor tenant in nascent ecosystems towards a relational design with large numbers of diverse interdependent agents in more developed ecosystems. While their notion of anchor tenants illuminates the roles of dominant actors in the context of ecosystem evolution, the ways in which such anchor tenants influence the development and evolution of entrepreneurial ecosystems remained unclear, especially regarding the early development of ecosystems. By addressing this research gap, this study investigated Start-Up Chile, a wellknown public accelerator that has played a critical role in the emergence and early development of the Santiago entrepreneurial ecosystem. This study offers novel insights into the role of anchor tenants, specifically public accelerators, on the development of its surrounding entrepreneurial ecosystem. Start-Up Chile is a particularly interesting anchor tenant to study, as it was one of the first public accelerators worldwide with the unconventional objective of bringing foreign entrepreneurs to its local ecosystem in order to stimulate the formation and development of the latter. Thus, the goal was not only to nurture local talent resources but also to attract valuable resources from outside to boost the early growth of the ecosystem. Start-Up Chile is, therefore, a compelling case to investigating the influence of an anchor organization, specifically a public accelerator, on the emergence and early development of nascent entrepreneurial ecosystems. The conceptual model presented in Figure 20 serves as the answer to the overarching research question: “How do public accelerators influence the early evolution of entrepreneurial ecosystems as anchor tenants?” This study investigated the role of public accelerators as anchor tenants from the perspective of entrepreneurial

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resources and their flow through dynamic interactions within the ecosystem. More specifically, this study is guided by the concept of resource orchestration (Sirmon et al., 2007, 2011) to abductively construct empirical data. The results demonstrate five different mechanisms with which a public accelerator orchestrates not only internal but also external resources. The concept of resource orchestration originally addresses the role of managers in effectively organizing firms’ resources to develop competitive advantage by structuring, bundling, and leveraging them (Sirmon et al., 2011). Although this concept was developed for an organizational context, resource orchestration has interesting conceptual implications for the context of a region when considering that early-stage entrepreneurial ecosystems often have a hierarchical governance structure with influential anchor tenants in nascent entrepreneurial ecosystems (Colombelli et al., 2019; Colombo et al., 2019; Spigel & Harrison, 2018). The following sections 6.2.1, 6.2.2, and 6.2.3 elaborate on how this study serves the answer to RQ1, RQ2, and RQ3. 6.2.1 Resource Injection into the Entrepreneurial Ecosystem RQ1 focuses on the internal dynamics of the anchor organization and does not deal with situations within the local entrepreneurial ecosystem. Resources that are acquired by the anchor organization do not immediately become embedded in the entrepreneurial ecosystem. To accelerate their integration, they can be first developed within an anchor organization. The first and second mechanisms of the conceptual model presented in Section 5.2 and 5.3 offer answers to this sub-question: Resources are developed by acquiring them from outside the ecosystem and by integrating and accumulating them in the accelerator. This study offers novel insights into the resource development of public accelerators. This special type of organization operates under distinct circumstances, as it periodically exchanges large numbers of its members (Cohen et al., 2019; Drori & Wright, 2018; Pauwels et al., 2016). The data shows that the resources of public accelerators are generally acquired through program participants. Start-Up Chile recruited the majority of its participants from foreign entrepreneurial ecosystems, thereby bringing three types of resources: specific knowledge, global social capital, and entrepreneurial mindset and culture. Literature suggests that these resources are valuable for entrepreneurial ecosystems, as they support and improve various entrepreneurial activities (Brown & Mason, 2017; Spigel, 2017; Spigel & Harrison, 2018). The findings accord with the literature on transnational entrepreneurs and returnee entrepreneurs, which highlights their roles as agents of the transfer of human and social capital between ecosystems in different countries (Baron, 2015; Drori et al., 2009; Saxenian, 2002). It is also noteworthy that StartUp Chile used equity-free funding to artificially create a migration path towards Chile. Interestingly, this artificial wave of migration brought similar resources into

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the country to the ones that transnational entrepreneurs usually transfer between their home and host country. However, the time that such temporal migrants spend in a host country is limited. Responding to this shortcoming, this study demonstrates a unique way in which a public accelerator can leverage resources that are temporarily available to achieve its strategic goal of developing a regional entrepreneurial ecosystem. The results of this study suggest that a public accelerator can integrate external resources in four ways: (i) community building, (ii) building a community-level entrepreneurial culture, (iii) facilitating knowledge sharing, and (iv) organizational learning and knowledge accumulation. These findings contribute to the research on accelerators. As discussed in Section 2.2, the research on accelerators remains in its infancy, despite its substantial presence in global entrepreneurial ecosystems. This study pays particular attention to public accelerators, which are a particular type of accelerator with distinctive strategic objectives different from those of their private counterparts. According to Pauwels et al. (2016), public accelerators are not driven by making profits through equity investments but instead primarily focus on regional development. While policymakers worldwide are interested in developing public accelerators to stimulate the development of entrepreneurial ecosystems, how such public accelerators develop their resource base and organizational competencies are mostly unknown. This study presents mechanisms in which such a public accelerator acquires and integrates external resources, which transnational entrepreneurs bring and temporarily make available. This study demonstrates that attracting foreign entrepreneurs does not automatically leads to successful resource injection, but public accelerators must facilitate direct interactions between the anchor organization and (potential) entrepreneurial actors, in which public accelerators transfer the resources that they acquired from foreign entrepreneurs to ecosystem stakeholders outside the organization. Section 5.4 answers RQ1 by presenting how an anchor organization transforms its resources from the organizational to the ecosystem level. This study revealed mechanisms whereby anchor organizations inject resources into the entrepreneurial ecosystem. While scholars have emphasized the importance of the role of resources in the development of an entrepreneurial ecosystem and indicated that resource injection is a potential solution for regions to overcome resource scarcity problems (Brown & Mason, 2017; Roundy et al., 2018; Spigel & Harrison, 2018), they did not offer sufficient understanding on how this resource injection can take place. This study revealed five mechanisms of resource injections and ecosystem resource development by anchor tenants, such as public accelerators, into their regional entrepreneurial ecosystem: (i) facilitating diverse interactions between the accelerator and the ecosystem, (ii) activating local talent, (iii) transferring knowledge from the accelerator to the ecosystem, (iv) creating an

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ecosystem-level entrepreneurial culture, and (v) creating ecosystem-level social capital. Importantly, this study found that it is essential that external resources brought by foreign entrepreneurs to be combined with local resources, as suggested by the concept of resource orchestration (Sirmon et al., 2011). By combining resources, an entrepreneurial ecosystem can develop capabilities that strengthen ecosystem dynamics and further build ecosystem resources. The importance of idiosyncratic resource structures is also stressed in the resource-based view, which argues that they are the source of competitive advantages (e.g., Barney, 1991; Freiling, 2001; Peteraf, 1993; Wernerfelt, 1984). Another notable point is the fact that resource injections take place only through interactions among actors, which allow them to transfer resources or create new resources by combining existing ones. These findings support studies that examine the essence of social capital in the context of entrepreneurial ecosystems. Particularly important was the creation of a culture formed by disseminating an entrepreneurial mindset. Sharing the same mindset or a similar cultural background makes the transaction of resources such as social capital, knowledge or financial capital smoother (Meyer & Peng, 2005; Spigel, 2017; Spigel & Harrison, 2018). Furthermore, one of the essential attributes of mature entrepreneurial ecosystems is that ecosystem stakeholders embrace a common entrepreneurial culture (Brown & Mason, 2017). 6.2.2 Resource Organization within the Ecosystem This section answers RQ2: “How do public accelerators organize resources within nascent entrepreneurial ecosystems?” While the previous step focuses on direct interactions between a public accelerator (anchor tenant) and potential ecosystem stakeholders, further interactions between entrepreneurs, support organizations, and private and public organizations should take place without the direct involvement of the anchor tenant, so that the ecosystem can reach more advanced evolutionary stages with relational governance designs that do not rely on few anchor tenants (Colombelli et al., 2018). This heterarchical organization of ecosystems actors increases the ecosystem’s complexity and strengthens its autopoietic capacity, which is the foundation of the sustainability mechanisms of well-developed entrepreneurial ecosystems. Sections 5.5 and 5.6 answer RQ2 by arguing that an anchor tenant coordinates the resource flow of entrepreneurial ecosystems and facilitates resource recycling. This study identified three mechanisms whereby public accelerators influence the resource flow within the ecosystem: (i) activating and integrating passive or new stakeholders, (ii) connecting ecosystem stakeholders with each other, and (iii) connecting the entrepreneurial ecosystem to the world. In this stage, the anchor organization is no longer the focal point of interactions. Instead, a public accelerator

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motivates new ecosystem participants to become more active and creates further domestic and international interactions between various actors. This strengthens and multiplies the ecosystem evolutionary dynamics with more idiosyncratic interactions, which lead to new resource combinations and the overall creation a critical mass of actors and resources (Brown & Mason, 2017; Roundy et al., 2018). Interactions between entrepreneurial agents and various types of ecosystem actors create ecosystem-level social capital, which makes the location increasingly attractive for future entrepreneurs and adds to its long-term resilience (Spigel & Harrison, 2018; Theodoraki et al., 2017). 6.2.3 Resilient Entrepreneurial Ecosystems This section answers RQ3: “How can entrepreneurial ecosystems become independent of its from their anchor tenants?” Scholars argued that resilient and sustainable entrepreneurial ecosystems have numerous so-called resource recycling processes (Roundy et al., 2017; Spigel & Harrison, 2018). Roundy et al. (2017) defined the resilience of entrepreneurial ecosystems as “the degree to which an entrepreneurial ecosystem can continuously recover from and adapt to exogenous shocks and endogenous pressures” (p. 101). Resource recycling is defined as a process “in which the entrepreneurs use their newly-acquired wealth, allied to the experience they have accumulated, to engage in other entrepreneurial activities, notably starting new business ventures and investing in other businesses as business angels or venture capitalists” (Mason & Brown, 2006, p. 55). Furthermore, “the demise of one firm invariably leads to the formation of others, directly and indirectly. This process of ‘flexible re-cycling’ can result in novel re-configurations of knowledge and human capabilities, allowing new firms to rise from the ashes of failed enterprises” (Bahrami & Evans, 1995, p. 63). From the ecosystem governance perspective, resource recycling is a bottom-up, Darwinian process, involving natural evolution, while the anchor tenant’s role is considered to be a part of a top-down process with the aim of developing a regional entrepreneurial ecosystem (Colombelli et al., 2019; Colombo et al., 2019). While a top-down approach can create initial evolutionary dynamics by offering various forms of entrepreneurial support, an advancing entrepreneurial ecosystem transitions overtime away from reliance on top-down governance mechanisms in the initial evolutionary stage to more flexible and complex bottom-up dynamics, stimulated and stabilized through resource recycling processes (Colombo et al., 2019; Spigel & Harrison, 2018). In the case of Start-Up Chile, the Santiago entrepreneurial ecosystem has not yet created a sufficient amount of resource recycling, which inhibits the development of ecosystem sustainability and maintains the dependency of the ecosystem on anchor tenants and the goodwill of policymakers. This study, however, offers novel

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insights into possible scenarios of how a nascent entrepreneurial ecosystem whose development is driven by an anchor tenant can generate resource recycling and thereby strengthen its resilience. The results shed light on the importance of proactive strategic changes on the part of the anchor organization to prevent the overreliance of ecosystem actors on top-down approaches by dominant stakeholders. Ecosystem processes such as resource recycling and resource acquisition are often comprised of knowledge resources. Their acquisition and utilization can also be explained by the concept of absorptive capacity, that is, “a set of organizational routines and processes by which firms acquire, assimilate, transform, and exploit knowledge” (Zahra & George, 2002, p. 186). Cohen and Levinthal (1990), therefore stated that “absorptive capacity does not simply depend on the organization’s direct interface with the external environment. It also depends on transfers of knowledge across and within subunits that may be quite removed from the original point of entry” (pp. 131-132). While scholars argue that absorptive capacity is essential to create a firm’s competitive advantage, this concept can also apply somewhat to the context of entrepreneurial ecosystems. While an entrepreneurial ecosystem is not an organization, each entrepreneurial ecosystem competes with other ecosystems over different types of resources, such as human and financial capital. Due to globalization and technological advancement, it has become increasingly easy for talented startup entrepreneurs and investors to move from one location to another (Madhavan & Iriyama, 2009; Spigel & Harrison, 2018). Entrepreneurs migrate to seek favorable conditions for their entrepreneurial activities, as seen in the high number of migrant entrepreneurs in thriving entrepreneurial ecosystems such as Silicon Valley and Berlin (Baron & Harima, 2019; Saxenian, 2002). Similarly, it is a logical decision for investors to concentrate their activities on ecosystems in which a large number of high-potential startups exist (Brown & Mason, 2017). This increases the necessity of entrepreneurial ecosystems to enhance their attractiveness and the quality of support environments. From this perspective, entrepreneurial ecosystems must continuously acquire knowledge and other types of resources and combine them with existing resources to create their competitive advantage. When ecosystem dynamics are mainly driven by one or a limited number of actors who are able to acquire external resources or nurture internal resources, the amount of resources that the ecosystem can gain and utilize is limited. Therefore, it is essential for the ecosystem to develop an increasing number of active stakeholders, which leads to the enhancement of ecosystem-level absorptive capacity. The ecosystem processes that create the adaptability and autopoiesis of ecosystems can be understood as dynamic capabilities (Teece, Pisano, & Shuen, 1997; Winter, 2003; Zahra, Sapienza, & Davidsson, 2006; Zollo & Winter, 2002) on the ecosystem level. According to Teece (2007), dynamic capability refers to “the distinct skills, processes, procedures, organizational structures, decision rules, and

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disciplines—which undergird enterprise-level sensing, seizing, and reconfiguring capacities (…) Enterprises with strong dynamic capabilities are intensely entrepreneurial” (p. 1319). Teece (2007) added that “they not only adapt to business ecosystems, but also shape them through innovation and collaboration with other enterprises, entities, and institutions” (p. 1319). In the context of entrepreneurial ecosystems, the complex adaptive system of different stakeholders needs to be able to sense, seize, and reconfigure opportunities to further develop the ecosystem by structuring, bundling, and leveraging the resources that flow between them. This creates the necessary flexibility in the development of ecosystems to react toward dynamically changing internal and external environments.

7 Conclusion This study conducted a single case study of Start-Up Chile in the Santiago entrepreneurial ecosystem. This chapter concludes the research by presenting limitations, practical implications, and a research outlook. 7.1 Limitations While this study contributes to the research on entrepreneurial ecosystems and accelerators in several ways, as discussed in the previous chapter, critically reflecting on the strengths and weaknesses of this research and delimiting the boundaries of the research contributions is essential to ensure the quality of this study and to demonstrate research opportunities for future investigation. This section presents several limitations that this study could not avoid. First, the study follows a single case study approach. The empirical analysis is purely based on the information collected about the Santiago entrepreneurial ecosystem. It is necessary for this study to be aware of the potential drawbacks of this approach. However, it is noteworthy that this study shares the view of the interpretivism, such as Stake (2010) and Flyvbjerg (2006) and believes neither that single case study approach is inferior to multiple case study methods or other approaches nor that single case study approaches cannot generate theories. To understand the complex evolutionary nature of entrepreneurial ecosystems, a single case study approach is effective to gain profound insights into the phenomenon, which is embedded in a specific geographical, institutional, and historical context. Nevertheless, the investigation of a single setting inevitably means that the study cannot isolate location-specific factors that might influence the dynamics of the entrepreneurial ecosystem. Therefore, applying the causalities that were newly identified in this study to other ecosystem settings requires critical and careful consideration of differences between the Santiago ecosystem and other ecosystems with regard to historical background, economic structure, entrepreneurship policy, and other institutional and geographical conditions. Second, it is important to mention that this study could not sufficiently consider the longitudinality of the phenomenon, since the main part of the fieldwork spanned only one month due to financial and time constraints. While this study purposefully selected interviewees who played essential roles in the development of the Santiago ecosystem during and after the initiation of Start-Up Chile, the study had to rely on retrospective views of its interviewees, which can be distorted from their original perception and may contain bias with regard to their own role. This study cannot guarantee how much interviewees can retain their memory and impressions and retrospectively report them (Henry, Moffitt, Caspi, Langley, & © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020 J. Harima, Public Accelerators in Entrepreneurial Ecosystems, https://doi.org/10.1007/978-3-658-31655-6_7

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Silva, 1994; Yarrow, Campbell, & Burton, 1970). Furthermore, the author could observe the phenomenon only during the time he stayed in Santiago. Fully acknowledging the significant role of field observation, which allows the study to gain non-verbal information, such as the mindset and attitude of different ecosystem stakeholders, underlying assumptions and rules regarding communication and interactions, societal values and norms about entrepreneurial activities, and the ways in which resources flow, this study is fully aware that longitudinal observation and fieldwork could have added substantially rich empirical insights to the evolution of a nascent entrepreneurial ecosystem. Third, the author conducted this study in a foreign environment, which posed several challenges in terms of inter-cultural settings. In qualitative research, it is essential to acknowledge and be responsive to the cultural and linguistic nuances of given research settings for the sake of cultural integrity (Pelzang & Hutchinson, 2018; Richardson et al., 2017). As suggested by Osanami Törngren and Ngeh (2018), the foreign background of investigators can influence the behavior of interviewees. Furthermore, the author conducted all the interviews in English, which was the mother tongue of neither the author nor the vast majority of interviewees. While most of the interviewees spoke fluent English, a few interview partners had several moments in which they experienced difficulties expressing their exact idea in English. Conducting interviews in a language of which the participants are not native speakers can affect the quality of data (Dana, 1994; Henry et al., 1994; Marschan-Piekkari & Reis, 2004; Welch & Piekkari, 2006). Fourth, this study focused on investigating the influence of Start-Up Chile as an anchor tenant for the development of the entrepreneurial ecosystem of Santiago de Chile. While it is a common perception in the global startup scene that Start-Up Chile has played a critical role in the recent development of the Santiago ecosystem, considering Start-Up Chile as the only anchor tenant would be an oversimplification of the phenomenon. In fact, the Chilean government has for a long time initiated numerous instruments of entrepreneurship support. For instance, the Chilean government has promoted entrepreneurship since the early 1990s by supporting business incubators. According to Chandra and Narczewska (2009), 21 out of around 25 business incubators that were operating at that time were financed through CORFO. The Chilean government has been supporting entrepreneurship through various programs, such as the Seed Capital Program (Cancino et al., 2019; Navarro, 2018) and Fundación Chile (Agosin et al., 2010). Apart from such policy instruments, some private initiatives such as the Endeavor Project, established in 1998, have contributed to general familiarity with the role of high-impact entrepreneurship. The investigation of how other ecosystem actors have influenced the development of the Santiago entrepreneurial ecosystem was out of the research scope of this study. Due to the complex nature of ecosystems, it is nearly impossible to isolate influencing mechanisms on the overall trajectory of the ecosystem.

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7.2 Practical Implications The study offers practical implications for two practitioner groups: (i) policymakers and (ii) the mangers of public accelerators. This section elaborates on the implications for both groups. 7.2.1 Policymakers This study offers several insights for policymakers who seek to establish an entrepreneurial ecosystem in their region while facing a scarcity of entrepreneurial resources. Healthy entrepreneurial ecosystems are complex systems that cannot be easily created by following pre-defined, universal prescriptions. Instead, it is important for policymakers to be fully aware of the evolutionary nature of these complex, idiosyncratic and continually evolving phenomena. This study shows that a nascent entrepreneurial ecosystem has entirely different factors with regard to evolutionary dynamics and its regional resource base compared to more mature ecosystems. While this study presents the case of a public accelerator having created initial evolutionary dynamics in its role as an anchor tenant that orchestrates entrepreneurial resources, it also reveals that its strong impact eventually creates a dependency that can hinder the ecosystem from becoming self-sustaining. Findings indicate that any top-down approach must be sufficiently flexible to adapt to changing circumstances depending on different evolutionary stages of entrepreneurial ecosystems. Another implication is related to how a region with limited resource availability can overcome resource scarcity. Typically, nascent entrepreneurial ecosystems lack innovative and growth-oriented entrepreneurs. The findings suggest that the number of these entrepreneurs can be increased in two ways. First, more local talent can be encouraged to become involved in entrepreneurial activities, and second, entrepreneurs from other entrepreneurial ecosystems can be incentivized to relocate their startups. While encouraging more local talent to become entrepreneurs is essential for the sustainable growth of entrepreneurial ecosystems, persuading entrepreneurs from other ecosystems to relocate is a direct intervention that can speed up the establishment of the components and dynamics that help the ecosystem expand, especially as foreign entrepreneurs are role models who encourage activities from local talent. As the case of the Santiago entrepreneurial ecosystem suggested, entrepreneurs who are attracted from other ecosystems not only increase the total amount of entrepreneurial activities in the region, but also inject crucial resources into the nascent entrepreneurial ecosystem; these include knowledge, social capital, and entrepreneurial culture. This study presented the example of a public initiative, which offers equity-free money for foreign entrepreneurs to attract them to the

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regional entrepreneurial ecosystem. The provision of financial capital under favorable terms is an effective way to attract entrepreneurs in early stages, who, by nature, are cash-strapped. However, what was also evident was that simply bringing in external entrepreneurs from other ecosystems does not automatically create evolutionary dynamics within the entrepreneurial ecosystem. As Start-Up Chile strategically did, external entrepreneurs must also be integrated into the emerging ecosystem by facilitating various interactions between external entrepreneurs and internal ecosystem stakeholders in order to make their resources accessible to other ecosystem stakeholders. This study showed that public accelerators can function as important anchor organizations within nascent entrepreneurial ecosystems, serving as an effective vehicle to attract and integrate entrepreneurs from other ecosystems. Before establishing a public accelerator, policymakers should, however, ensure that they provide few but clear goals for their resources, such as human capital, social capital, entrepreneurial knowledge, an entrepreneurial culture. Policymakers are encouraged to develop a governance structure and strategic objectives that facilitates numerous resource transaction processes. While Start-Up Chile has developed an innovative approach of public entrepreneurial support measures, its program participants could be seen to face several obstacles specific to a public organization, such as bureaucratic procedures and the unavoidable influence of political environments. Reflecting these findings, this study recommends that policymakers critically reflect on how to refrain from intervention and how to provide the public accelerator with a certain degree of autonomy. The fewer harmful characteristics of public organizations that the accelerator possesses, the more it will attract qualified and ambitious accelerator managers, increasing the organization’s flexibility and ability to continuously learn and adjust its processes accordingly. The absence of managers with an entrepreneurial background will not only decrease the organizational legitimacy of the public accelerator towards participants but also limits the range and quality of the support that it can offer for participants due to the lack of tacit knowledge to help participants with real-life challenges of startups. The results of this study demonstrate that policymakers can create a regional entrepreneurial culture with the help of public accelerators. Public accelerators can let entrepreneurs in their program present themselves as entrepreneurial role models and facilitate various interactions among their participants and ecosystem stakeholders to transfer entrepreneurial resources and disseminate their creative approaches, innovative behaviors, and entrepreneurial values. 7.2.2 Public Accelerator Managers This study offers several practical implications for the managers of public accelerators with regard to the internal and external environment of their organization.

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The internal environment refers to inter-organizational dynamics, such as community building, knowledge-sharing mechanisms, organizational learning, and alumni network development. The external environment covers intra-organizational topics, such as ways to encourage participants to engage in interaction beneficial for ecosystem stakeholders and to activate, support, and integrate other stakeholders, such as large corporations that have not been active in the startup scene, universities and research institutions that can foster future innovators and entrepreneurs, and banks and VC’s that have been risk-averse and distanced from startups but can become potential partners or investors. Before the accelerator management takes care of the accelerator’s external environment, it should first tackle internal challenges and processes. Findings of this study suggest that accelerator participants from outside the ecosystem not only bring unique resources but also show strong proactiveness in community engagement from the inception of acceleration programs despite the limited duration of their stay in the ecosystem. This is because they aim to establish a local network as soon as possible to overcome their lack of local social capital. As this study demonstrated with the case of Start-Up Chile, community building is one of the critical functions of public accelerators. Upon the arrival of new participants, the first and foremost objective should be building a community with shared values and a collective identity, allowing everyone to identify with each other under the umbrella of the accelerator. As the findings of this study indicate, public accelerators can facilitate both business- and non-business-related activities that help participants to get to know each other better. Accelerator management can use the community as a platform for effective knowledge sharing among participants and for knowledge flow between the accelerator and the participants. One option to leverage the community is a periodic group meeting in which participants can share their challenges and set milestones. In the case of Start-Up Chile, the accelerator refers to this type of meeting platoons. Periodic events such as joint lunches on Fridays can facilitate informal knowledge sharing and help strengthen the unity of the community. A critical point that accelerator managers should be aware of is that organizational learning starts with the activities of each employee. Through formal and informal interactions with participants, accelerator managers can gain experience and accumulate know-how that helps them support startups. However, the institutionalization of acquired knowledge is more complicated than individual learning. Accelerator managers are therefore encouraged to share insights and tacit knowledge gained from their personal experience with other accelerator employees. Facilitating regular meetings in which managers can exchange their experience and learning and discuss how they can transfer their knowledge to the implementation of new programs is one way to go about this. Another possibility to accumulate the

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experience of individual accelerator managers is the storage of knowledge in the form of explicit knowledge, for example, as a database for employees of the accelerator regarding the progress of participants and the obstacles they faced during the acceleration program. It is advisable to keep close contact with alumni and to integrate them into the accelerator program, for instance, as mentors. Furthermore, by creating a bridge between alumni and current participants, the accelerator can make the human and social capital of the more experienced and well-connected alumni accessible to program participants in the future generation. This study shows that accelerator managers need to pay attention not only to the intra-organizational environment but also to the external, inter-organizational dynamics with other (potential) stakeholders within the entrepreneurial ecosystem. The study’s findings suggest that the external environment can be stimulated in three ways: by requiring both local and foreign participants to become active in the local entrepreneurial ecosystems; by integrating ecosystem stakeholders into accelerator processes; and by attracting and supporting stakeholders who are new to startup engagement and intend to become active in the entrepreneurial ecosystem. Generally, setting the development of the local entrepreneurial ecosystem as the main goal is strategically more meaningful for public accelerators than only focusing on the short-term benefits of program participants, since thriving entrepreneurial ecosystems create vibrant regional dynamics and a rich base of entrepreneurial resources, thus creating a sustainable favorable environment for startups. To fulfill this aim, accelerator staff should require and enable their participants to become involved outside the accelerator so that they stimulate regional dynamics and transfer their resources. While accelerator managers should coordinate these activities, participants need a certain autonomy regarding their involvement in order to be sufficiently committed. In the case of Start-Up Chile, the accelerator developed a point system to oblige their participants to engage within the ecosystem, allowing the participants to choose the nature of their commitment themselves. The main goal should be to activate local talent and apply their resources to startup activities and induce diverse interactions with different ecosystem stakeholders. This creates social capital and leads to ecosystem-wide knowledge accumulation. Apart from sending participants out, the accelerator management should actively invite other ecosystem stakeholders to activities within the program and even encourage them to take a particular responsibility, such as mentoring, organizing workshops and seminars, and working as judges at pitching events. This enables the accelerator to create an extensive network within the ecosystem and simultaneously provides participants with additional learning opportunities. The accelerator management is recommended to share its learning and contacts with other actors and build a platform for mutual support and learning among ecosystem

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stakeholders. One of the most important stakeholder groups to be integrated into the accelerator’s value creation is investors, who can provide follow-up financing for participants. Through their above-mentioned activities, public accelerators can activate new potential actors, who can offer diverse types of support for startups. What is challenging yet enormously important is encouraging them to engage in startup support in a sustainable and autonomous manner. One possibility that this study presented was the continuous involvement of regional stakeholders in events. Participation in regional events, in which stakeholders and entrepreneurs can regularly meet and exchange their experience, can offer opportunities for stakeholders to develop knowledge about the startup scene and their own manners of startup engagement. By providing them with access to accelerator’s resources and by connecting them with other stakeholders, accelerator managers can help integrate them into the ecosystem and enhance their ability to coordinate some of the ecosystems resource flows. 7.3 Research Outlook The findings and limitations of this study offer implications for future research on entrepreneurial ecosystems. As discussed in Section 7.1, this study has several limitations. The first limitation is related to the nature of single case studies, which limits the generalizability of findings and the independence of emerging causalities from context specificity. As Spigel (2017) suggests, entrepreneurial ecosystems are embedded in the historical and institutional environments of the location. Therefore, it is essential that future researchers investigate the role of anchor tenants within other nascent entrepreneurial ecosystems. Scholars can consider selecting entrepreneurial ecosystems in the early stage of ecosystem evolution that display other institutional features or historical contexts. These can include regions with post-colonial backgrounds, communist political regimes, recent conflict or war, or completely different industrial structures from Chile. In the case of the Santiago entrepreneurial ecosystem, Chile’s industrial structure, with strong primary sector industries such as mining, influenced ecosystem evolution. Selecting regions whose industry strongly relies on the service sector or manufacturing can add novel insights to an understanding of ecosystem evolutions in a nascent entrepreneurial ecosystem driven by tenant organizations. Alternatively, choosing a region with similar institutional conditions to Santiago would certainly be meaningful to investigate whether and to what extent similarities and differences are apparent. In this case, regions with a similar size, industry structure, and geographical conditions (e.g., geographical isolation) to Santiago should be considered.

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The second limitation of this study is the insufficient consideration of longitudinality. Due to the resource constraints, this study could consider only a limited time span in investigating the Santiago entrepreneurial ecosystem. However, ecosystem evolution takes a considerable amount of time, as it involves fundamental changes in institutions, stakeholders, and culture. Therefore, future researchers are recommended to investigate a single entrepreneurial ecosystem for a longer span so that they can observe a longer period of its evolution from inception. This will illuminate the manner in which a region transitions from a nascent to a mature entrepreneurial ecosystem. As discussed in Section 2.1.4.2, the current literature on ecosystem evolution tends to offer snapshots of evolutionary stages and lacks insights into the dynamic and complex processes that occur between different stages. This study concluded that the Santiago entrepreneurial ecosystem has generated initial dynamics in ecosystem development, but its evolutionary stage has not yet reached maturity. Therefore, this study also encourages scholars, especially local researchers, to pay attention to the further development of the Santiago entrepreneurial ecosystem. The investigation of the Santiago entrepreneurial ecosystem also addresses the third limitation of this study, namely, the foreignness of the author to the research setting in Santiago. Chilean researchers could likely better understand the historical context, cultural influences, and assumptions that local people take for granted; avoid language barriers; and build trust with Chilean interviewees. One recommendation for future studies on the role of anchor tenants in the early evolution of nascent entrepreneurial ecosystems is based on the fourth limitation discussed in Section 7.1. Future research should critically consider which and how many anchor organizations should be taken into account in investigating ecosystem evolution and exploring how different types and sizes of anchor organizations interplay to create or hinder evolutionary dynamics. This study focused on StartUp Chile as a central anchor organization, while empirical data indicates the existence of other possible anchor tenants, who may have played significant and different roles from Start-Up Chile in the early evolution of the ecosystem. Current literature does not offer any evidence regarding different types of anchor tenants and their functions. Apart from the research suggestions above, which are related to the limitations of this study, this study revealed several novel aspects that are worth paying attention to in future studies on the evolution of entrepreneurial ecosystems and public accelerators: (i) community in entrepreneurial ecosystems, (ii) tacit knowledge in the ecosystem, (iii) the roles of culture in ecosystem evolution, (iv) the ecosystem’s governance structure, (v) roles of shared value in public accelerator management, and (vi) the organizational learning of public accelerators.

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First, one newly identified causality of this study is the importance of forming a small, active, and inclusive community as an ecosystem’s nucleus, as this spreads knowledge, social capital, and entrepreneurial culture throughout the ecosystem. Anchor organizations can create and lead such communities, which explains their strong influence on early ecosystem development. They can institutionalize entrepreneurial processes and leverage emerging communities for the creation of an ecosystem-wide culture. Therefore, this study encourages future studies to gain a better understanding of early community formation by elaborating on how it stimulates interactions and what its role is in advancing nascent ecosystems. Second, another thus far underexplored determinant of ecosystems is the importance of knowledge and its transfer among ecosystem actors. As entrepreneurial activities and their resulting processes are often innovative and highly idiosyncratic, the most valuable knowledge is of an experiential nature, with entrepreneurs gaining this only through trial-and-error processes in their real lives. Nascent ecosystems lack this type of tacit knowledge due to their few startups and even fewer success stories. Most of this knowledge cannot be codified and made explicit for easy application to startups. Instead, it must be applied directly to the specific challenges of entrepreneurs, which requires one-on-one interaction. Future research could focus on questions such as how tacit knowledge can be best utilized in nascent entrepreneurial ecosystems. The third aspect is the role of culture in ecosystem evolution. Even though, Saxenian (1994) more than two decades ago named regional entrepreneurial culture as the primary determinant of Silicon Valley’s positive development compared to Boston, there is surprisingly little research on how the entrepreneurial culture of entrepreneurial ecosystems influences their evolutionary path, how it develops in emerging ecosystems, and how it changes over time. Future research would contribute to research by addressing these questions. One factor influencing early ecosystem development that rarely appears in ecosystem literature is the media and its role in changing the view of society towards entrepreneurship and transferring the success stories of entrepreneurial role models. Future research could investigate the role of media in this regard and how it influences talent to become interested in entrepreneurial activities. Fourth, the research on ecosystems should examine organizational theories for a better understanding of certain ecosystem dynamics, such as regional-level learning, regional resource flows, regional resource recycling. Furthermore, regional competitiveness, regional resources, and regional capabilities should be further explored. The research could exploit insights from the resource-based view (Freiling, 2001), dynamic capabilities (Teece et al., 1997), resource orchestration (Sirmon et al., 2011), and the competence-based view (Freiling, 2004). Similar to members of organizations, ecosystem actors strive for a common goal, with high

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degrees of interdependence. Especially during their emergence, they can show more hierarchical structures (Colombelli et al., 2019; Colombo et al., 2019). Even though these structures disappear when the ecosystems grow, similarities to heterarchical organizations remain. Fifth, the peculiarities of public accelerators have not yet been subject to extended research. As their main objective is to nurture and develop their local entrepreneurial ecosystem, future research should pay special attention to different strategies in this regard. While Start-Up Chile focused on attracting foreign entrepreneurs to utilize their resources for ecosystem development, other approaches could focus on the development of local talent with the help of experienced former entrepreneurs as accelerator staff. One aspect that appeared to be crucial for StartUp Chile and has not been investigated in accelerator research was the development of an accelerator community with shared values and behaviors. Future research is encouraged to dig deeper into the implications of community development for accelerators. The final suggestion for future studies is to elaborate on organizational learning and absorptive capacity in the context of accelerators. Accelerators have new batches of participants every few months, each of whom is a sort of new member of the organization who stays only for a brief period of time. This makes organizational learning particularly challenging and requires high levels of absorptive capacity. This study offers some hints on how accelerators’ processes can aid organizational learning, such as a community around shared organizational values and culture and intensive one-on-one and group mentoring. Future research should further examine these areas.

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