Interconnectedness in entrepreneurial ecosystems: a social capital perspective

Abstract

This research aims to analyse the characteristics of Entrepreneurial Ecosystems (EEs) and their interconnectedness of entrepreneurs and actors within an EE in a developing country context bound by scarce resources through linking social capital theory to the successful establishment and development of such EEs. The analysed Lebanese EE advances our understanding of the existing EE frameworks through the examination of its available, missing and unexplored elements against the current literature. By embedding the theory of social capital, this research pays close attention to means in which local and international social capital are generated and deployed and examines their significance and weight across the birth and growth stages of EEs.

The EE in Lebanon is explored through 43 semi-structured interviews that are conducted with entrepreneurs and supporting actors; e.g. investors, CEOs of incubators and accelerators, representatives from academic institutions and governmental bodies. The adopted methodological approach is interpretivist that examines the studied context and the link between social capital and EEs.

The findings uncovered that in a country like Lebanon, social capital is one of the most important elements underpinning the genesis as well as the development and saturation of EEs. Social capital widely replaces the missing local support, advocates an internationalized mindset in the entrepreneurial environment and presents social capital as an insurance model for entrepreneurs and supporting actors to gain usually lacking benefits. Findings also reveal that whilst financial support from the government is key to the emergence of EEs, social capital is vital for the growth and sustainment of EE. Moreover, the configuration of the EE is highly dependent on the social attributes as opposed to material and cultural ones considering the limited local resources and infrastructure; hence the significance of social capital. The examination of the three dimensions of social capital (structural, relational and cognitive) highlight enabling factors like the diaspora, community commitment and disregard of individual reciprocal benefits. Moreover, the analysis of the trajectory of EE highlights that in the absence of formal support systems, an initial formal financial nudge and a heightened flow of formal and informal diaspora-backed international linkages constitute the backbone of a developing resource constrained EE. Accordingly, despite local corruption and nepotism, the system becomes flexible enough to overcome the negative aspects of social capital. Therefore, contrary to existing beliefs in the literature, the difference in the weight of EE elements and the seldom-dysfunctional EE components are not detrimental for the functioning of the EE considering the dense local and international social capital.

The contributions of this study are the following. This research emphasizes a need for re-establishing frameworks of EEs in developing countries that take into consideration their limited resources and strengthen the significance of other elements like local and international social capital. By doing so, this study becomes the first to link social capital theory to the trajectory and success of EEs. Separating the analysis of local and international social capital revealed significant differences between the roles of both capitals highlighting only two unique benefits of local social capital (i.e. emotional and legal support), whilst the rest of the benefits are either exclusive to international social capital or are common to both. Therefore, the significance of international social capital presents a new framework for EE researchers and policymakers in developing countries that inputs the required elements, which strengthens the establishment and deployment of social capital and calls for crafting the needed strategies for establishing and maintaining local and international linkages at an early stage. Additionally, by linking social capital to the trajectory of EEs in developing countries, this study highlights the particular significance of the former in replacing some of the missing elements of EEs in such locations bound by scarce resources.

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Identifiers

ORCID for Mine Karatas-Ozkan: orcid.org/0000-0002-9199-4156

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