Entrepreneurial ecosystems, institutional quality, and the unexpected role of the sustainability orientation of entrepreneurs

This paper finds that regions in the developing countries are able to level up in growth orientation and intensity of entrepreneurial activity with the regions in developed countries should entrepreneurial ecosystem prioritizes sustainability orientation. Most scholars agree that entrepreneurial ecosystems facilitate growth aspirations and create opportunities for entrepreneurs. However, a few studies have lately suggested that sustainability orientation of ecosystem—under specific circumstances—may actually level up growth orientation and intensity of entrepreneurial ecosystems when sustainable orientation is supported by an increase in institutional quality in developing countries. This paper goes deeper into the sustainability view of entrepreneurial ecosystems by studying cities in Eastern and South-Eastern Europe. In this region, the sustainability orientation of entrepreneurs has received increasing attention. However, as of yet, the literature has focused only on single actors (the entrepreneurs) and the development of their ventures. How the sustainability orientation of entrepreneurial ecosystem actors as a whole (including, e.g., policymakers, university professors, investors, managers of business incubators) may influence EE outcomes, and if there might be differences between developed and developing regions, remains an unaddressed gap. The aim of this study of this paper is to examine the entrepreneurial ecosystem outcomes across regions with different levels of sustainable orientation and quality of institutional environment. An important implication of our findings is that even in Europe’s least developing regions, active sustainability orientation and a marginal improvement of institutional quality are particularly pertinent for entrepreneurial ecosystems growth orientation and the rate of entrepreneurship in the ecosystem. While research on entrepreneurship and entrepreneurial ecosystems (EEs) has consolidated over the last decade, one question remains unanswered: how can the sustainability orientation of EE actors facilitate the intensity and growth orientation of entrepreneurship in the ecosystem? Entrepreneurship activity relies on the sustainability orientation of the ecosystem, which is lacking in most developing countries where reaching the UN’s Sustainable Development Goals (SDGs) is the most pressing concern. Using primary data on 1789 EE actors from 17 cities in East and South-East Europe and econometric analysis techniques, we investigate the relationship between the sustainability orientation of EE actors and EE outcomes. We find that this relationship is conditional on the country’s institutional quality and is consistent for a variety of EE outcomes. Practical implications for regional policymakers and entrepreneurs are developed.