We built a theory on how entrepreneurial ecosystem policy benefits some places within rural regions while leaving others behind. In a historical analysis of the Scottish Highlands and Islands, 1965 to 1990, we compared policies that attract external resources from outside the region with those that embed resources within local communities. We found that resource-attracting policies not only generated higher economic output but also concentrated opportunity, drained peripheral areas, and increased regional fragility. Resource-embedding policies produced lower aggregate output but greater spatial inclusion and resilience. Our historical analysis identifies spatial draining, disempowerment, and empowerment as mechanisms through which policy shapes ecosystem outcomes over time.
Venture capital (VC) transactions are impeded by two frictions: entrepreneurs cannot credibly signal quality to investors, and investors cannot fully protect themselves against governance risks in incomplete–contract relationships. We argue that top-tier law firms address both frictions: sell-side firms through signaling that reduces legitimacy deficits, buy-side firms through contractual expertise that protects investor interests. Using 71,129 global VC deals from 2005 to 2020, we find that top-tier law firm involvement is associated with higher ownership stakes, valuations, returns, and exit success. Both mechanisms are stronger in weaker legal environments. Results are robust to multiple identification strategies.
Are family firms born or made? We argue that firms become family-oriented as transgenerational intentions gain salience and reshape owners’ mindsets. Leveraging China’s one-child policy reform as an exogenous shock to within-family succession feasibility, we conduct a difference-in-differences analysis of 2,837 listed firms. We find that, relative to nonfamily firms, firms for which family succession is feasible increase R&D intensity following the reform, with the effect driven primarily by lone-founder firms. Our findings identify conditions under which founder-led firms transition toward family-oriented behavior, providing new insight into the “ made ” side of the born-or-made debate in family business research.
This article investigates whether institutional conditions that limit employees to pursue hybrid entrepreneurship reduce potential high-growth entrepreneurship. Using the Alcatel v. Brown ruling, as an institutional change that curtailed hybrid entrepreneurial activity, we show that affected states experienced a marked decline in indicators of ventures with high-growth potential. Effects are strongest among early-stage ventures, consistent with hybrid entrepreneurship enabling low-cost experimentation. Venture capital investors also respond to reduced experimentation by increasing syndication and staging. Overall, the results show that institutional arrangements shape experimentation through hybrid entrepreneurship and, consequently, the supply of ventures capable of achieving high growth.
Entrepreneurship outcomes tend to be right-skewed and heavy-tailed, with a small fraction of “star” firms often accounting for a disproportionate share of value creation. Yet, how to define the “star” entrepreneurs driving these outcomes remains highly contested. In this paper, we argue that star identification is best understood as a modeling choice that depends on the research objective—no threshold rule can be evaluated as “optimal” or more “precise” independent of what the rule it is supposed to serve—and introduce a precision–recall framework that makes the trade-offs of threshold-based approaches more explicit. Using 13 years of Inc. 5000 data linked to subsequent public listings, we then compare nine threshold-based methods, including the recently proposed quantile absolute deviation procedure by Gala and Schwab (hereafter GS-QAD) which uses a bootstrap to set a cutoff tailored to the tail of the observed distribution. Three findings emerge. First, using simulations, we show that GS-QAD’s bootstrap procedure introduces systematic sample-size bias that can confound cross-industry comparisons. At the same time, as sample size grows, the method converges to a near-universal 17% to 20% rule. Second, firms classified as stars are 10 to 20 times more likely to become publicly traded and account for the majority of current market capitalization among publicly traded Inc. 5000 alumni. However, the choice of threshold determines a precision–recall trade-off in which no method dominates on all metrics. Finally, the probability of becoming a publicly traded company rises smoothly with revenue, with no detectable discontinuity at any threshold. We conclude that stars are where you draw the line—thresholds should be treated as modeling choices fit to the research or policy objective, validated externally where feasible, and reported with their explicit trade-offs.
Gender inequality in venture capital remains a persistent systemic issue shaped by interacting socio-institutional, network, and entrepreneurial ecosystem (EE) dynamics. This study examines how targeted inclusion interventions interact with structural and network-level dynamics to shape the gender finance gap. Conceptualizing the financial support network (FSN) as a complex adaptive system embedded in an EE, we use agent-based modeling (ABM) to simulate how male-, female-, and mixed-team-founded startups, accelerators, and venture capitalists co-evolve across different levels of ecosystem development and connection regimes. The model examines interventions across three nodes of the financing pipeline: expanding female- and mixed-founded startups at ecosystem entry, implementing positive gender discrimination in accelerator selection, and adopting gender-preferential funds allocation by venture capitalists. We assess how these interventions influence systemic patterns of equity and efficiency under different EE conditions. Results reveal non-linear, context-dependent, and outcome-dependent dynamics. Specifically, in underdeveloped ecosystems, isolated interventions aimed at increasing representation at entry or within accelerators reduce overall investment volume and may temporarily widen the funding gap. By contrast, developed ecosystems absorb such increased representation without major efficiency losses, although representation gains alone do not necessarily translate into more equitable funding outcomes. Conversely, coordinated interventions across multiple stages of the financing pipeline, particularly those combining network access and preferential capital allocation, generate stronger equity gains while maintaining systemic efficiency as ecosystems mature. Overall, these findings conceptualize the gender finance gap as a wicked problem embedded in the adaptive structure of entrepreneurial finance and highlight the importance for systemic, sequenced, and context-sensitive inclusion strategies. JEL Code: L26, J16, D85, G24, C63.
A tension exists between the potential entrepreneurial strengths associated with neurodiversity and the systemic barriers neurodiverse individuals face within entrepreneurial ecosystems. Applying Ecological Systems Theory, we analyze how neurodiverse entrepreneurs interact with the nested layers (Micro- to Chrono-system) of the entrepreneurial ecosystem. This multi-level perspective reveals how inter-system (mis)alignments create friction, necessitates theorizing neurodiverse ecological niches, and positions neurodiversity as influencing ecosystem co-evolution. We offer a dynamic, interactionist framework that resolves theoretical limitations and provides a foundation for building more inclusive and effective entrepreneurial environments supportive of cognitive diversity.
Angel investment research has grown rapidly; yet, when and under what conditions angel investors recommit remains understudied. Integrating escalation of commitment (EOC) theory with the conflict management styles (CMSs) perspective, we examine these conditions through archival data investigation, a conjoint experiment (2,368 decisions by 148 angel investors), and a field study (214 ventures by 112 angel investors). We show that prior commitment increases angel investors’ reinvestment likelihood, contingent on entrepreneurs’ CMSs. We advance EOC theory by identifying relational boundary conditions and conflict management research by theorizing its moderating role in reinvestment decision-making, revealing escalation as a socially embedded process shaped by investor–entrepreneur interactions.
This study develops an integrated resource orchestration framework to examine how internal resource configurations shape entrepreneurial resilience in new ventures under crisis conditions. Specifically, we focus on bundles of social and technological resource slack and constraints and conceptualize entrepreneurial resilience as comprising two dimensions: stability (severity of loss) and flexibility (time to recovery). We argue that stability is primarily driven by a resource compensation logic, whereas flexibility is driven by a crisis-induced resource reconfiguration logic. Extending resource orchestration theory (ROT), we conceptualize entrepreneurial teams as the central actors of resource orchestration and introduce entrepreneurial team task-related faultlines (ETTF) as a key structural mechanism shaping how effectively resources are mobilized under disruption. Using a sample of 345 Chinese listed new ventures, we find that dual resource slack reduces severity of loss but slows recovery, whereas among constrained bundles, social resource slack combined with technological constraints enables both lower loss and faster recovery. Response surface analyses further show that greater misalignment between social and technological resources increases loss severity but shortens recovery time. In addition, ETTF moderates the effects of resource bundles on resilience outcomes by strengthening both compensatory coordination and reconfiguration capacity. This study advances ROT by showing that internal resource configurations shape entrepreneurial resilience through both bundle composition and misalignment, contingent on team structural conditions.
This study examines hybrid entrepreneurship (HE) in non-Western contexts where informal and non-market institutions are central. Based on 31 case studies of female hybrid entrepreneurs in Ethiopia and 64 in-depth interviews, we conceptualize HE as a relational, co-constructed process shaped by institutional complexity. Women enact HE in liminal spaces sustained through relational practices: reconfiguring boundaries, cultivating ambiguity and gray areas, and maintaining webs of reciprocity. Institutional complexity both enables and constrains HE, underscoring its social embeddedness rather than individual agency. The study advances research on HE, female entrepreneurship, and institutional complexity by foregrounding relational dynamics and gendered experiences.