Innovation ecology as a precursor to entrepreneurial growth

Purpose The purpose of this paper is to examine the governmental, economic, and technological factors contributing to a country's innovation ecology that have an impact on sustainable economic growth. Design/methodology/approach This paper investigates governmental, economic, and technological supports that comprise the innovation ecology of 34 nations using ordinary least squares, discriminant analysis, and mediated regression. It is proposed that the strength of a country's innovation ecology is associated with greater sustainable entrepreneurial growth opportunities. Innovation indicators and trend analyses were collected from Eurostat Yearbook 2007, Science and Technology, and Global Financial Data over the 1995‐2005 period. Findings The results reveal that while the influence of government and the economic environment encourage innovation ecology, having resources at the research and development levels, human capital, and early seed funding were key indicators of innovation. The greater the degree of research and development, the availability of a highly skilled labor force, and the amount of private and public venture capital funding, the more likely it is that a strong national innovation ecology will emerge leading to the creation of new business ideas and growth opportunities. Originality/value The results contribute to the understanding of the significant role of innovation investment for new business development and growth.