The impact of entrepreneurial ecosystem factors on financial performance of small and medium-sized enterprises in Australia

The notion of entrepreneurial ecosystems has evolved with the advancement of theoretical research and empirical studies. Previous researchers have explained the importance of incorporating entrepreneurial ecosystems within a single framework to examine the functionality of the whole system. A single framework enables better understanding of the interaction between entrepreneurial actors and factors. Some researchers argue that the literature on clusters underplays the role of entrepreneurs and entrepreneurial management in creating and co-creating organisations and markets, and supporting ecosystems. This study seeks to contribute to the body of knowledge on entrepreneurial ecosystems to better explain how entrepreneurial ecosystem factors impact the financial performance of small and medium-sized enterprises (SMEs). Data collected from 12 urban and non-urban ecosystems enabled the development of a model based on a set of entrepreneurial ecosystem factors. By identifying the impact of those factors on SME financial performance, the study found that their importance differs based on SME location. Further, drawing from decision-making theory and linking the mediation effect of entrepreneurial ecosystem factors, this study extends this line of work by examining how regional entrepreneurial culture, educational institutional support, and business and social networks mediate the relationship of entrepreneurs’ decision-making style and SME financial performance.

This study highlights the shortfalls of existing entrepreneurial ecosystem understandings by explaining the interrelationship between entrepreneurial ecosystem factors, and augments the existing body of knowledge by proposing ways that these factors can be strengthened. The study has some limitations that future research might address, in the context of the entrepreneurial ecosystems. In conclusion, this study has theoretical and practical implications for the development of entrepreneurial ecosystem research and regional entrepreneurship development in Australia.