ABSTRACTThis study analyzes how regional manufacturing characteristics, i.e., specialization and the size of new manufacturers, and the entrepreneurial ecosystem, i.e., contextual factors driving entrepreneurial actions, impact the rate of new knowledge-intensive business service (KIBS) firms. Its spatial analysis of 121 European regions reveals that the entrepreneurial ecosystem plays a decisive role in supporting KIBS formation rates in territories with a solid industrial fabric. The economic potential of more attractive neighbouring regions can be detrimental to regional KIBS formation rates. The study offers valuable implications on how the entrepreneurial ecosystem can facilitate the interaction between manufacturing and KIBS firms.