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The Influence of Digitalization On Emergent Processes of Entrepre
The Influence of Digitalization On Emergent Processes of Entrepre
Andreas Liening
TU Dortmund University
Dortmund, Germany
andreas.liening@tu-dortmund.de
Abstract
Recent literature conceptualizes digitalization as an important enabler of
entrepreneurial activity. However, the understanding of how digitalization influences the
broader entrepreneurial landscape remains limited. In this context, there have been
approaches lately that suggest to investigate potential effects of digital technologies and
infrastructures on entrepreneurial ecosystems. Despite growing research on the
intersection between digitalization and entrepreneurial ecosystems, the vast majority of
extant work in the literature is of conceptual nature. The present short paper refers to a
study that intends to provide empirical evidence on how the availability of different sets
of digital technologies facilitates emergent processes of entrepreneurial ecosystems. To
better comprehend the non-linear interactions and emergent processes within such
systems, we apply a complexity science perspective. We plan to perform Qualitative
Comparative Analysis, representing a configurational approach to comprehend complex
phenomena. Thereby, we aim to reveal under which conditions digitalization influences
emergent processes of entrepreneurial ecosystems.
Introduction
Recent literature conceptualizes digitalization, i.e., “the sociotechnical process of applying digitizing
techniques to broader social and institutional contexts that render digital technologies infrastructural“
(Tilson et al. 2010, p. 749), as an important enabler of entrepreneurial activity (Nambisan 2017; von Briel
et al. 2018; Autio et al. 2018). As an example, digital technologies and infrastructures provide start-ups with
new methods to shape their processes of value creation, delivery, and capture (Autio et al, 2018), thus
facilitating business model innovation (Prahalad and Ramaswamy 2003). Moreover, digitalization affects
venture creation processes in that it allows for more fluid boundaries and more dispersed agency
(Nambisan 2017). However, while existing literature acknowledges the role of digitalization as an enabler
of new venture creation processes (von Briel et al. 2018), the understanding of how digitalization influences
the broader entrepreneurial landscape remains limited (von Briel et al. 2018; Autio et al. 2018; Sussan and
Acs 2017).
In this context, there have been approaches lately that suggest to investigate potential effects of digital
technologies and infrastructures on entrepreneurial ecosystems (Autio et al. 2018; von Briel et al. 2018).
The concept of entrepreneurial ecosystems has drawn considerable attention from researchers, policy and
practitioners in recent years (Spigel and Harrison 2018). Following the complexity-based conceptualization
by Roundy et al. (2018, p. 5), an entrepreneurial ecosystem can be defined as “a self-organized, adaptive,
and geographically bounded community of complex agents operating at multiple, aggregated levels,
whose non-linear interactions result in the patterns of activities through which new ventures form and
dissolve over time.” More recently, entrepreneurial ecosystems have been conceptualized as a form of
cluster that specializes in exploiting the technological potential afforded by digitalization to facilitate new
venture creation (Autio et al. 2018). In addition, scholars highlight the centrality of digital technologies and
infrastructures in the conception of entrepreneurial ecosystems and call for further investigations into the
influences of digitalization on the processes and structures that shape entrepreneurial ecosystems (von
Briel et al. 2018; Autio et al. 2018).
Although research on the intersection between digitalization and entrepreneurial ecosystems is growing,
the vast majority of extant work in the literature is of conceptual nature. The present short paper refers to
a study that intends to offer empirical evidence on the influence of digitalization on entrepreneurial
ecosystems. Moreover, current literature provides only limited guidance with respect to the issue that, with
digitalization, entrepreneurial initiatives become less bounded and entrepreneurial agencies becomes less
predefined, resulting in more complex and dynamic dependencies between entrepreneurial processes and
outcomes (Nambisan 2017). Since traditional theories and concepts in entrepreneurship have assumed
rather stable boundaries around entrepreneurial initiatives (e.g. Honig and Karlsson 2004) as well as
predefined sets of founders (e.g. Shane and Eckhardt 2003), alternative conceptualizations of
entrepreneurship are required that incorporate the increasing complexity infused by digital technologies
(Nambisan 2017) in order to develop more accurate explanations of the influence of digitalization on
entrepreneurial ecosystems.
As pointed out above, it is suggested that digital technologies and infrastructures create technological
affordances that shape the processes and structures comprising entrepreneurial ecosystems (Autio et al.
2018). However, the complex and emergent phenomena underlying entrepreneurship in a digitalized world
are yet to be explained, and scholars propose to examine how the availability of different sets of digital
technologies influences the evolution of entrepreneurial ecosystems (von Briel et al. 2018). Thus, we seek
to address the following research question:
How does digitalization influence the emergent processes of entrepreneurial ecosystems?
To answer this research question, we intend to examine the influence of digitalization on entrepreneurial
ecosystem emergence from a complexity science perspective, with emergence being defined as “the creation
of new ‘order’ – structures, processes, and system-wide properties that come into being within and across
system levels” (Lichtenstein 2011, p. 486). Entrepreneurial ecosystems have already been conceptualized
as complex adaptive systems to better understand the dynamic relationships and emergent processes within
such systems (Roundy et al. 2018; Arikan 2010).
We will address our research question through performing Qualitative Comparative Analysis (QCA),
representing a configurational approach to comprehend complex phenomena (Ragin 1987). This
methodology is appropriate for our intended research project because it implies non-linear interrelations
and complex causality instead of assuming linear relationships and singular causation (Fiss 2007). Building
on the extant concept of digital affordances by Autio et al. (2018), we seek to inductively elaborate the
complexities of the causal relationships inherent in theories at the intersection between digitalization and
entrepreneurial ecosystems. We intend to assemble a sample of 20 to 30 examples of effective
entrepreneurial ecosystems. Qualitative data will be collected in the form of in-depth-interviews, while
quantitative data will be drawn from secondary data sources and surveys. This rich, exploratory research
design will allow us to reveal under which conditions and circumstances digitalization influences emergent
processes of entrepreneurial ecosystems.
In the next section we elaborate on the influence of digital technologies and infrastructures on
entrepreneurial ecosystem emergence and the contribution of complexity theory to study the emergent
processes of such systems. Based on this theoretical dissection we propose a conceptual model that
illustrates how digitalization enables emergent processes of entrepreneurial ecosystems. We then outline
our proposed research design and the intended research steps. In the discussion we provide an outlook on
the anticipated theoretical and empirical contributions of our research.
range of studies has focused on examining prominent ecosystems resulting in a profound understanding of
essential elements and attributes of entrepreneurial ecosystems. Core elements include, among other
factors, entrepreneurial actors, institutions (e.g. public sector agencies and universities) and
entrepreneurially-oriented organizations (e.g. start-ups and venture capitalists) (Mason and Brown 2014).
Although these findings are crucial for the understanding of entrepreneurial ecosystem structure, current
literature has been criticized for applying a rather static framework to study entrepreneurial ecosystems,
hence ignoring that ecosystems are continually evolving (Alvedalen 2017). Moreover, research tended to
describe entrepreneurial ecosystems as being composed of completely or partially disconnected elements
and as characterized by causal or linear interactions among agents (Roundy et al. 2018), while in fact
entrepreneurial ecosystems “emerge from nonlinear and dynamic combinations of sets of variables”
(Roundy et al. 2018, p. 7). Thus, there is growing consensus among scholars that future research should
investigate the complex interrelations among the system’s elements in order to shed light on the facilitating
mechanisms and emergent processes of entrepreneurial ecosystems (Autio et al. 2018).
Since complexity theory provides an appropriate conceptual lens to examine systems characterized by non-
linear interactions as well as self-organizing behavior (Anderson 1999) and entrepreneurial ecosystems
have already been conceptualized as complex adaptive systems (Roundy et al. 2018; Arikan 2010), we take
a complexity science perspective to investigate how digitalization influences the emergent processes of
entrepreneurial ecosystems. Adopting a complexity perspective also corresponds with the call for
“theoretical concepts and methodological approaches that reflect the incremental and nonlinear paths
that digital artifacts and platforms facilitate in entrepreneurial initiatives” by Nambisan (2017, p. 14).
As displayed in Figure 1, the theory of synergetics is concerned with order parameters, control parameters,
the microscopic system level, the macroscopic system level, system constraints and the environment
(Liening et al. 2016). Based on the theory of synergetics, emergent processes in entrepreneurial ecosystems
begin with an external activation that is initiated by a control parameter (Liening et al. 2016). In this study,
we conceptualize digitalization as a specific type of control parameter, which could also be referred to as
an injection of resources (Roundy et al. 2018) or an external enabler of entrepreneurial processes
(Davidsson 2015). The availability and application of technologies add energy to an existing micro-system
consisting of startups, established firms, customers etc. Since the system is open towards external
influences, it is exposed to the control parameters that provide the system with energy, representing a
nonspecific natural control (Liening et al. 2016). In the context of digitalization, control parameters such
as computer software and mobile devices (representing digital technologies) or social media platforms and
crowdfunding systems (representing digital infrastructures) create digital affordances that promote a new
form of emergent processes in the entrepreneurial ecosystems, which is due to a reduced dependency of
start-ups on their local environment as well as more opportunities for business model experimentation and
innovation (Autio et al. 2018). For instance, digital platforms facilitate common value creation by
interconnected groups of actors and digital makerspaces enable individuals with shared interests to pursue
entrepreneurial opportunities (Nambisan 2017). Thus, digital technologies act as a platform for bottom-up
emergence of innovations and promote self-organizing system behavior (Zorina and Karanasios 2017). In
consequence, the impulse originating from the control parameter, i.e., digitalization, ignites an undirected
change process in the agents operating on the microscopic system level, including individual entrepreneurs
or ventures. Then, system elements on the microscopic level, including heterogeneous agents such as
entrepreneurs, ventures or institutions, perform actions and interactions which facilitate the emergence of
novel behavior and non-linear feedback cycles (Liening et al. 2016). In a process of self-organization, these
elements give rise to new or modified artifacts (e.g. novel system behavior, new ventures or devices) which
are observable in the form of an order parameter at the macroscopic level of the entrepreneurial ecosystem
(Liening et al. 2016). The hitherto dominant order is broken up in this way and new business models as well
as forms of competition characterize the ecosystem.
Since we focus on the study of emergent processes of entrepreneurial ecosystems in this short paper, we do
not explain other processes inherent in entrepreneurial ecosystems. It should be noted, though, that it is
also necessary to consider the influence of the environment, because entrepreneurial ecosystems possess
permeable boundaries and are interacting with adjacent elements (Liening et al. 2016). The theory of
synergetics functions as an appropriate framework to study the influence of digitalization on the emergent
processes of entrepreneurial ecosystems because it is capable of integrating both digitalization as a control
parameter and conceptualizing entrepreneurial ecosystems as complex systems.
Building on the concept of digital affordances outlined by Autio et al. (2018), we propose that digital
technologies and infrastructures provide affordances that enable emergent processes of entrepreneurial
ecosystems. This is in accordance with the notion by von Briel et al. (2018) who suggest that their
conceptualization of six mechanisms of digital technologies giving rise to start-up activity also applies to
the context of entrepreneurial ecosystems. More specifically, we argue that the three digital affordances
identified by Autio et al. (2018) represent causal conditions for the emergence of entrepreneurial
ecosystems: (1) decoupling between form and function increases the flexibility and re-programmability of
digital devices which enables an asset to be redeployed to new types of uses by different users, thus
transforming the modalities of where and how entrepreneurial activity in clusters arises (Autio et al. 2018);
(2) disintermediation allows service providers to directly interact with different stakeholders, hence
opening new ways for seamless communication and value-creating interactions (Autio et al. 2018) which
could lead to the evolution of new networks of entrepreneurial activity; (3) generativity enables diverse and
uncoordinated audiences to recombine the elements of offerings and resources accessible on digital
platforms (Nambisan 2017). The possibility to assemble, extend and redistribute the functionalities of
digital artifacts connects different actors in shaping entrepreneurial opportunities (Yoo et al. 2010), thus
facilitating emergent processes of entrepreneurial ecosystems. In the following section, we outline the
intended research design.
(Ceric and Krivokapic-Skoko 2016). Boolean algebra is applied to identify sets of interrelated conditions
which clarify the findings obtained from a set of exemplary cases (Ceric and Krivokapic-Skoko 2016),
therefore enabling QCA to explain how a particular outcome is created. Being a configurational approach,
QCA implies non-linear interrelations and complex causality, instead of assuming linear relationships and
singular causation (Fiss 2007).
Data Collection
QCA is focused on “examining complexity through the intensity of in-depth investigation of a moderate
number of cases, while maintaining rigor, replicable procedures and the use of formal logic” (Ceric and
Krivokapic-Skoko 2016, p. 351). To address the research question of the presented study, we intend to
assemble a sample of 20 to 30 examples of effective entrepreneurial ecosystems located in Europe, because
QCA can be utilized to examine small to medium numbers of cases (Misangyi et al. 2017). As the method
allows the combination of qualitative and quantitative data, we will use different types of data sources: (1)
in-depth interviews; (2) secondary data collected from three different sources to identify combinations of
digital affordances facilitating entrepreneurial activity; and (3) survey data obtained from key informants
located in entrepreneurial ecosystems.
In-depth interviews with key agents operating in the respective entrepreneurial ecosystems are the first
data source. Interviews will be semi-structured, utilizing a specified guideline. Questions will address issues
such as which digital technologies and infrastructures are applied by new ventures and how digital
affordances enable agents to interact with other agents operating in the system. Insights generated from
the interviews will also be used to identify key constructs and variables relevant for the quantitative analysis.
In order to measure the digital affordances (decoupling, disintermediation and generativity) representing
the conditions that could facilitate start-up activity, secondary data will be drawn from three different
databases. These sources include the European Digital City Index (Nesta 2016), the Digital Economy and
Society Index (European Commission 2018) as well as the ICT Development Index (International
Telecommunication Union 2017) and contain a large number of information and communication
technology variables as subsets of the three digital affordances, reflecting the degree of digitalization on the
regional and national level. These variables include, e.g., uptake of CRM, social media uptake, cloud uptake,
e-commerce turnover, etc. Start-up activity in entrepreneurial ecosystems constitutes the outcome variable
and will be indicated by appropriate variables (e.g., new-business density) drawn from the European Digital
City Index (EDCI 2016). Survey data collected from key informants will be used to provide further measures
of digital network utilization of entrepreneurial ecosystems, drawing on a digitalization measurement
instrument proposed by Sabbagh et al. (2012).
Data Analysis
QCA requires that data analysis integrates cases or practices with either positive or negative outcomes as
well as conditions that could lead to such outcomes. In the context of this intended study, a positive outcome
would be the facilitation of emergent processes of entrepreneurial ecosystems. Relevant conditions are
represented by the three identified digital affordances, namely decoupling, disintermediation and
generativity. After the collected quantitative data are integrated into a data table, values will be transformed
into so-called set membership scores (Berger 2016). Then, a truth table is established that generates a
compilation of all conditions that initiate positive outcomes (Ragin 2008). Results can be presented in
various ways, such as written statements or solution formulas. By applying this methodology, we intend to
reveal how, i.e., under which conditions and circumstances, digitalization influences emergent processes of
entrepreneurial ecosystems.
Conclusion
This short paper aims to expand the understanding of how digitalization affects the broader entrepreneurial
landscape. More specifically, we intend to explore the influence of digital technologies and infrastructures
on the emergent processes of entrepreneurial ecosystems. By applying a complexity science perspective, we
are able to incorporate the increasing complexity infused by digital technologies in order to develop more
accurate explanations of the influence of digitalization on entrepreneurial ecosystems. In our view, adding
a new theoretical perspective that particularly considers the complexity traits of digital technologies and
infrastructures represents an important theoretical contribution, since extant literature provides only
limited guidance with respect to the issue that, with digitalization, entrepreneurial initiatives become less
bounded and entrepreneurial agency becomes less predefined (Nambisan 2017). Moreover, the proposed
synergetic entrepreneurial ecosystem model enables a better understanding of how the different
stakeholders of entrepreneurial ecosystems interact.
We believe that the anticipated results of QCA could provide organizations with valuable insights into how
digital technologies and infrastructures can be utilized to facilitate business model innovation and enhance
the interactions with other stakeholders of the respective entrepreneurial ecosystem. Moreover, we think
that policy makers who want to understand the underlying drivers of entrepreneurial ecosystem emergence
could benefit from our findings.
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