The Role of Innovation Ecosystems and Social Capital in Startup Survival

Innovation ecosystems, including technology parks and incubators, endeavor to achieve a high density of startups that is rich in social capital to help tenants evolve. Given the importance of social capital on startup success and the opportunity for social capital diffusion in high-density ecosystems, the inconclusive impact of ecosystems on firm performance warrants further attention. We present a startup survival model that distinguishes between access to social capital and using it. Empirical tests with the longitudinal Kauffman Firm Survey find that those startups that use social capital by collaborating with other agents (universities, industries, and government organizations) significantly outperform startups that do not. However, we also observe that the amount of social capital available in an ecosystem counterintuitively does not correlate with a tenant's use of it, and correlates weakly with longer life expectancy. These results are moderated by whether the tenant is a high-tech startup or not. Findings contribute to extant research in innovation and entrepreneurial ecosystems. Policy and pedagogical recommendations for leveraging an ecosystem to improve firm performance and achieve the ultimate goal of regional economic development are discussed.