Unpacking the process of resource allocation within an entrepreneurial ecosystem

Abstract

• We reveal how the process of resource allocation, mobilization and circulation unfolds in entrepreneurial ecosystems. • We offer a “resource-dynamic” account of entrepreneurial ecosystems, complementing the “resource-provision” perspective in extant literature. • We show how resource dynamics may be alternative sources of sustained ecosystem competitiveness ( ecosystem health ), complementing the traditional resource bundling as optimal “recipes” in extant literature. • We shed light on the reciprocities between regional entrepreneurship and regional resources. • We offer implications for governments and entrepreneurs in guiding policy initiatives towards, and measuring the long-term health of, regional entrepreneurial ecosystems. While entrepreneurial ecosystems (EEs) are often regarded as spatially bounded resource allocation systems that allocate and mobilise resources for new venture creation, less is known on the underlying process of resource allocation that sustains the development and prosperity of entrepreneurial ecosystems. Following an inductive approach, we conducted a qualitative study on Shenzhen's entrepreneurial ecosystem. Our findings show that the process of resource allocation in an entrepreneurial ecosystem unfolds in four interconnected themes - resource endowments, resource use, resource dynamics and enabling conditions of resource dynamics. Based on these dimensions, we offer an integrated process model revealing how an entrepreneurial ecosystem mobilises and allocates resources over time. Complementing the “resource-provision” account in extant literature that illuminates the optimal “recipes” of ecosystem resources as sources of competitiveness, we offer a “resource-dynamic” account, which addresses how effective resource allocation, mobilisation and circulation within and outside of the ecosystems may be alternative sources of sustained growth for entrepreneurial ecosystems. We also contribute to the regional entrepreneurship literature by shedding light on the feedback impacts of new venture creation activities on regional resources. Our findings offer implications for governments and entrepreneurs in guiding policy initiatives towards, and measuring the long-term health of, regional entrepreneurial ecosystems.