Navigating Transition: The Role of Formal and Informal Institutions in Shaping Entrepreneurial Ecosystems

Entrepreneurial Ecosystems have gained significant attention due to the enormous economic importance they have. The unique properties of ecosystem components, their systemic relationships, and, most significantly, the impact they have on entrepreneurial activities in various nations, are of great interest to many researchers in this field. Such influence, in turn, directly or indirectly affects the economic development and growth of countries or regions. Yet even regions with similar characteristics can display varying entrepreneurial outcomes. So, the question is why similar nations or areas have different ecosystem settings, and how does this variance impact entrepreneurial activity? Why do some ecosystems, with similar geography, size, resources, or historical context, develop entrepreneurial activities more effectively than others? Furthermore, this first main research question raises other questions like, such as: do certain ecosystem elements have more influence on the others and onto the overall system, and if so, why? Moreover, does this differential influence trigger the main antecedents of entrepreneurial outcomes?
Thus, it seems that an effective and well-fitting entrepreneurial ecosystem design is a crucial point for many countries and regions which face particular difficulties in the development of the entrepreneurial sector. It is especially true for situations in which such development is necessary or desirable. The issue is mostly relevant for developing countries, or countries in transition, which have a comparatively shorter history of capitalist market economies, and therefore, in many cases, a weaker entrepreneurial culture and a lower level of entrepreneurship. It holds true for Caucasian countries like Azerbaijan or Georgia (and many other post-Soviet countries) which continue to struggle in developing a thriving entrepreneurial sector. The same challenge is observed in developing countries with different levels in industrialization or freedom. Therefore, examining the influence of the entrepreneurial ecosystems and their elements on each other and on the overall entrepreneurship level in different countries and contexts can shed more light on the issue and help policymakers to gain a deeper understanding of how such ecosystems function, including what is needed to develop better ecosystem design in order to foster entrepreneurial activity.
The main purpose of this dissertation is to gain new insights into the influences resulting from entrepreneurial ecosystems’ impact on entrepreneurship. To achieve this goal, it is necessary to first gain a more detailed understanding of the entrepreneurial ecosystems, a term still in its “adolescence” in the literature. Next, within the framework of the ecosystem-entrepreneurship nexus, we establish new insights of why the effectiveness of entrepreneurship is different depending on the ecosystem setting, and which elements are important to focus on to boost the process. Such insights can contribute to the establishment of favorable ecosystems, and therefore also the entrepreneurial climate, encouraging the private sector to think about how to change existing systems and make them more fruitful for entrepreneurial development. Based on the findings regarding the influence of entrepreneurial ecosystem on entrepreneurship, the PhD thesis a) compares the development of an ecosystem in one country; b) compares two Caucasian countries within the same region and same historical date of independence, to understand how different developmental paths can occur, and which factors lead to such divergence; and c) analyzes developing countries focusing on specific aspects in their ecosystems (especially formal institutions) and their effect on entrepreneurial outcomes.