International Journal of Law and Business Studies (IJLBS)

Entrepreneurial Ecosystems and Innovation: A Study of Small and Medium Enterprises (SMEs)

Entrepreneurial ecosystems (EEs) have become a significant paradigm in the context of the development of innovative and enterprise growth by people, institutions, and resources that are interrelated. In this respect, Small and Medium Enterprises (SMEs) are crucial as the participants of and the receivers of active entrepreneurial systems. This is a review paper that discusses the linkage between entrepreneurial ecosystems and innovation based on SMEs in particular. Using the literature available, the paper reveals that the ecosystems of universities, government policies, financial institutions, technology hub, as well as social networks contribute to the creation of an environment that helps in the innovation. It focuses on the effect of enabling regulatory environments, availability of finance, mentoring and business networks in triggering innovation and technological progress among the SMEs. The other barriers to innovation-led growth discussed include resource constraints, inadequate access to digital infrastructure and disjointed policy implementation. This paper, based on findings of global and regional researchers, especially those in the emerging economies, highlights the importance of a holistic and comprehensive approach to the strengthening of entrepreneurial ecosystem in a holistic manner. The results highlight that sustainable innovation in SMEs needs institutional support, as well as cultural openness, adaptive learning and policy coordination. The review concludes with suggestions on how to develop resilient ecosystems that can be used to make SMEs more competitive and promote inclusive economic growth.