Fostering Entrepreneurship in Nonmetro Areas: Ecosystem Architects as Conduits of Knowledge Spillovers

Abstract

Prevailing theories hold that regional entrepreneurial activity is a function of each region’s preexisting local resource endowments. But these theories do not explain entrepreneurial activity in regions that possess few of the requisite endowments, such as nonmetropolitan areas, which often lack many of the resources conducive to entrepreneurship. Drawing on institutional theory and knowledge spillover theory, we theorize that individuals engaged in institutional work play a key role in catalyzing entrepreneurial activity within such regions by serving as conduits of voluntary, horizontal knowledge spillovers. We propose that their ability to do so is enhanced when they access nonlocal tacit knowledge from others working in similar contexts. We further propose that, consistent with sociological theories of social capital and trust, local socioeconomic conditions can constrain the absorption of such knowledge and thereby local venturing in their home communities. Empirically, we study these propositions through a field intervention: an in-person gathering fostering tacit knowledge spillovers among individual entrepreneurial ecosystem architects from nonmetro counties in a Midwestern U.S. state. We conducted additional tests of alternative specifications, identification, and behavioral impacts. Taken together, these arguments and findings deepen our theoretical understanding of an important pathway in the development of regional entrepreneurial ecosystems.