Why startups fail in emerging entrepreneurial ecosystems?





Entrepreneurial Ecosystem, Startup Failure, New Venture Failure, Innovation, Emerging Markets.


Objective: Entrepreneurs are responsible for innovation, but they do not act in the vacuum, the greater the support for their action, the improve the chances of success. Startups - technology-based companies with high potential for growth and impact - are associated with the existence of entrepreneurial ecosystems that facilitate entrepreneurial action. This paper goal is to provide evidence that help to explain why startups fail in an emerging entrepreneurial ecosystem. Method: We perform exploratory research in which entrepreneurs whose startups failed in the emerging entrepreneurial ecosystem of Porto Alegre, Brazil, were interviewed. We complement the analysis with the collection of secondary data. Results: Building on Isenberg’s (2011) six domains, we generate ideas on how each of them in emergent entrepreneurial ecosystem may influence startup mortality. Our results indicate that emerging entrepreneurial ecosystem could be much better in avoiding the premature failure of startups. Policy and Finance are the most problematic domains, while culture, support, and markets are the three middle-ground dimensions. These last three need improvement, but they are not as critical as the first two. Contributions: This paper contributes to the entrepreneurial ecosystems literature by exploring how emergent ecosystems contribute for discontinuity of promising startups. Originality: Besides entrepreneurial mistakes, problems that are out of the entrepreneur control can also cause a venture's death (Cardon et al., 2011). Building on this, we use Isenberg's (2010; 2011) model for understanding the influence of the entrepreneurial ecosystem on the circumstances that entrepreneurs faced that determined their startup failure (Jenkins & McKelvie, 2016). Social Contributions: by better understanding why startups fail in emerging entrepreneurial ecosystems, we support policymakers in their focus on possible improvements of the features that seem most relevant to entrepreneurs. The public agents can then work to provide a better environment for future entrepreneurial endeavors.


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Author Biographies

Fernando Antonio Monteiro Christoph D'Andrea, Embry-Riddle Aeronautical University, Daytona Beach, FL, USA

is Assistant Professor of Entrepreneurship at the O'Maley College of Business, Embry-Riddle Aeronautical University in Daytona Beach, FL, USA. He holds a PhD in Entrepreneurship from Oklahoma State University and his research deals with entrepreneurial uncertainty and the interplay between institutions and entrepreneurship.

Diego Alex Gazaro dos Santos, Universidade Federal do Rio Grande do Sul (UFRGS), Porto Alegre, RS, Brazil

is a profeessor at the Graduate program in Management at Atitus Educação. He holds a PhD and MS in Management from the Universidade Federal do Rio Grande do Sul (UFRGS). He research interests are in entrepreneurship and innovation ecosystems, open innovation corporate innovation, business models, entrepreneurship and Startups.

César Vinícius Pereira Costa, Universidade Federal do Rio Grande do Sul (UFRGS), Porto Alegre, RS, Brazil

is an entrepreneur at Semente Negócios, he holds a Master's degree in Innovation, Technology and Sustainability from the Graduate Program in Businss at the Universidade Federal do Rio Grande do Sul/UFRGS. His research interest is in innovation management, startups and sustainability.

Aurora Carneiro Zen, Universidade Federal do Rio Grande do Sul (UFRGS), Porto Alegre, RS, Brazil

is Associate Professor at the Department of Management, Escola de Administração (EA) at the Universidade Federal do Rio Grande do Sul (UFRGS), her research is focused in innovation management, entrepreneurship, entrepreneurial ecosystems, and startup management.


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How to Cite

D’Andrea, F. A. M. C., Santos, D. A. G. dos, Costa, C. V. P., & Zen, A. C. (2023). Why startups fail in emerging entrepreneurial ecosystems?. REGEPE Entrepreneurship and Small Business Journal, 12(3), e2055. https://doi.org/10.14211/regepe.esbj.e2055