What conditions favor high-potential entrepreneurship? Unpacking the nexus between the industrial structure and startup typologies

Plain English SummaryIn this paper, we question the implicit assumption that more entrepreneurship drives more innovation and growth, arguing that only specific typologies of entrepreneurship are responsible for these phenomena. In recent years, researchers have highlighted the importance of the factors external to the startups to explain the entrepreneurial dynamics. In particular, specialized and sophisticated economic systems have often been associated with a high level of entrepreneurship. Accordingly, we investigated the differentiated effects that industrial systems have on the high-potential typology of startups, namely, innovative startups, high-growth startups, and pioneers. Upon analyzing the case of Italy across a 5-year period (2015-2019), we found that certain compositions of industrial structure may either favor or hinder the typologies of the aforementioned startups. These results inform potential entrepreneurs of the importance to analyze how external conditions can distinctively affect the process of opportunity identification among different forms of high-potential startups.In this paper, we question the implicit assumption that more entrepreneurship drives more innovation and growth, asserting that specific typologies of entrepreneurship are responsible for these phenomena. A growing number of studies has analyzed this relationship while focusing on the overall level of entrepreneurship. This paper exploits recent advancements in measuring the sophistication and connectedness of economic systems, brought by the notions of economic complexity and relatedness, to study the nexus of industrial structure and high-potential forms of entrepreneurship. The present study uses a panel dataset for Italy for the period 2015-2019. The results show a differentiated pattern among the high-potential startups considered, with relatedness and complexity having a positive effect for innovative startups, a negative one for high-growth startups, and no effect for pioneers. These results inform potential entrepreneurs of the importance of analyzing how external conditions can have distinctive effects on the process of opportunity identification among different typologies of high-potential startups.