One location and two entrepreneurial ecosystems? A study in the digital and fashion entrepreneurial ecosystems (ees) in Egypt post the 2011 revolution

Abstract

The overarching aim of this thesis is studying the processes of digital and fashion EEs in the context of emerging economies. By studying the processes of EEs, this thesis refers to studying the practices undertaken by entrepreneurs when they draw on local resources to produce high impact entrepreneurship (HIE). An EE is a set of interdependent domains that enable high impact entrepreneurship within a particular territory. The significance of this research stems from the scarcity of research studying EEs processes in emerging countries compared to developed economies. An implication of this gap is that questions as to Where do local entrepreneurs in emerging markets extract their resources from? and How do they allocate their resources for the functioning of ecosystems? remain unanswered. Therefore, the research questions of this thesis have been crafted to address such a gap. The three research questions are derived as to 1) What are the characterisations of digital and the fashion human capital, financial capital and market voids in Egypt? 2) What role does social capital (SC) play in mediating the voids for both ecosystems? and 3) What is the impact of the institutional voids on the effective functioning of the digital and fashion EEs? The entrepreneurial ecosystems theory postulates that high growth entrepreneurship requires resourceful domains of a mature financial domain, talent, dense networking, and easy information access. Nevertheless, those set of factors are only appropriate for developed economies while absent for emerging markets that are characterised by labour, financial capital and market voids. Those voids possess institutional arrangements of institutional voids that are fundamentally different from those of the developed economies; a gap which lends credence to studying the local dynamics of entrepreneurial ecosystems in emerging markets. By welding social capital theory with that of institutional voids and entrepreneurial ecosystems, the theoretical framework suggests that an entrepreneur relies on his/her embeddedness within a dense social network of family and friends to fill regional voids. This means that entrepreneurs utilise social capital to access three specific resources of talent, funding, and information when alternative hubs of resources are scarce or absent. To answer the questions of this thesis, the researcher adopted a qualitative method by in-depth interviewing a total of 41 entrepreneurs divided between 31 digital and 10 fashion entrepreneurs operating in Egypt. Findings suggest that there are two industry-based ecosystems operating separately and that they are at their different growth stages within the same region. This is because both ecosystems varied in terms of the constituents of their voids and their reliance on social capital for funding and recruitment which impacted their growth cycles. Findings revealed that the digital ecosystem, though operating in a region of institutional void, is surprisingly and unexpectedly, operating strongly. Moreover, it is at its stage of growth to maturity compared to the embryonic fashion ecosystem. The digital EE is growing led by an active sector of incubators and accelerators, supportive policy intervention of ‘Digital Egypt’ and entrepreneur-led networking events. Also, active attempts by the digital entrepreneurs themselves such as self-education has helped in mediating the scarcity and the pricy digital talent whereas they resisted social capital for cultural reasons. On the other hand, the fashion entrepreneurs relied on social capital for funding and recruitment, as well as their efforts to mediate the severity of the voids of the fashion EE. However, lacking policy intervention, lacking awareness of incubators in business, resisting networking, and resisting access to external credit hampered growth attempts of the fashion ecosystem. Implications of research findings are that there is a desperate need for a strategic intervention to support creative ecosystems. An intervention could be through the financial inclusion of creative industries to acknowledge artwork as a type of business eligible for bank credit. Also, offering dual degrees within business education in schools of design and arts could perhaps raise awareness amongst the fashion entrepreneurs on the role of incubators for their business scale-ups. This could help fashion entrepreneurs grow, expand and diversify their operations, as well as improve their ecosystem functioning. Acknowledging that creative industries in the UK accounted for billions of pounds in revenue, this would contribute to the growth of the Egyptian economy