A microfoundational network theory of rural entrepreneurial ecosystems: establishing the link between structure and behaviours

Abstract This paper examines the microfoundations of entrepreneurial ecosystems in rural settings through a network-theory lens. It has long been acknowledged that ecosystems promote knowledge spillovers and subsequent economic vitality, which often serves as an implicit basis for the formation of much industrial policy worldwide. Nevertheless, research into the relationship between ecosystem structures and actors has predominantly focused on densely populated centres. Furthermore, authors have only tangentially implied links between network structures and the behavioural features of ecosystems, such as the linking of overall cohesion, network density, information processing activities, cognitive attitudes, and perceptions. This has left a gap in our understanding of how individuals might navigate the inherent complexities of ecosystems and address the hurdles to obtaining resources. This is despite widely held assumptions that centralised (urban) versus peripheral (rural) actors have access to and benefit from these systems in different ways. This exploratory study contributes to this theoretical debate by merging microfoundational and network theory of innovation theoretical lenses and provides an in-depth view of the ways (periphery) rural entrepreneurs in the Northeast region of the UK perceive and engage with local ecosystem support mechanisms for innovation. It highlights numerous conceptual variables that influence knowledge accumulation for these firms and suggests further analytical approaches to understand sub-regional-level behavioural and subculture variations. Plain English Summary This study aims to gain a deeper understanding of how rural entrepreneurs navigate networks and engage with their regional ecosystem to acquire resources. While numerous authors have suggested ‘networks’ as a vital component of ecosystem functionality and performance in general, questions remain about the boundary conditions, factors leading to cohesion, and the behavioural aspects that influence the nature of networked interactions. Furthermore, there remain very few studies that focus their examination of the network variable on the rural entrepreneurial context, which renders our understanding of regional ‘network’ systems and actor behaviours inherently incomplete. By deploying microfoundational and network-theory lenses, this exploratory study aimed to gather evidence on interaction density and behavioural aspects of rural entrepreneurs within a regional ecosystem, with a specific focus on knowledge sharing and acquisition, as well as collaboration behaviours. While previous work suggests that an absence of entrepreneurial ecosystem cohesion leads to missed opportunities for firms to access critical knowledge bases and resources across various local sectors, our study extends this notion by suggesting that this geographic proximity issue does not only limit the opportunity for access to ecosystem activity but also creates heterogeneous effects on how knowledge acquisition, cognitive perceptions, and information processing styles manifest within individuals across the broader network structure. Our findings suggest that ecosystem subcultures are determined not only by sector-level or demographic variables, but also by a number of network behavioural and social elements at the microfoundational level. Our study implies that policymakers and ecosystem enablers should focus not only on macro-dynamics but also prioritise micro factors underlying ecosystems, as they are equally vital in achieving a robust entrepreneurial environment and productive entrepreneurship.