Strategy and entrepreneurial ecosystems: a multi-level inquiry into firm strategy, policy design, and risk

Abstract

This dissertation consists of three essays on strategy development, innovation policy, and risk management. Navigating uncertainty is a fundamental challenge for firms, policymakers, and investors alike, and understanding the mechanisms that drive success or stability across these domains is a central concern in academic research. The three essays highlight complementary themes: the dynamic strategic processes enabling new ventures to disrupt established industries, the conditional effectiveness of government interventions in fostering entrepreneurial ecosystems, and the measurement of systemic risk spillovers in global markets.The first essay investigates the strategic drivers that enable new entrants to disrupt capital and scale intensive industries, utilizing a longitudinal case study of Tesla Inc. Addressing the limitations of static strategy frameworks, this study proposes a preliminary theory of dynamic strategy focused on what a business should do over time to succeed. Through a rigorous analysis of Tesla’s history compared to multiple competitors, including both legacy automakers and startups, the essay identifies a "recursive exploration and exploitation strategy" as a core driver of success. This strategy entails a phased approach where resources and capabilities generated in one phase are deployed to tackle distinct challenges in the next, supported by an expansive purpose and vertical integration. The findings offer a novel theoretical contribution by conceptualizing strategy as a temporal sequence of resource accumulation and deployment, highlighting how visionary leadership and long-term commitment to innovation can reshape industry boundaries. The second essay examines the impact of government policy on regional entrepreneurial activity and innovation outcomes, specifically analyzing the National Science Foundation’s Innovation Corps (I-Corps) program. Conceptualizing I-Corps as a form of "Entrepreneurship Training and Ecosystem Grant" (ETEG), the study employs a staggered difference-in-differences design to estimate the causal impact of these interventions on startup formation across U.S. cities. The findings reveal that ETEG's effectiveness is strongly moderated by regional endowments, with diminishing marginal benefits in the presence of high levels of existing research and private funding. We advance ecosystem theory by delineating the boundary conditions of government support, by challenging the assumption of linear returns to resource accumulation. Instead, we demonstrate that innovation policies must be rigorously place-sensitive to mitigate diminishing marginal returns. This essay contributes to the literature on innovation policy by clarifying how public institutions can effectively stimulate scientific progress while managing the uncertainty and risk inherent in early-stage research commercialization. The third essay introduces a novel approach to measuring financial systemic risk, moving beyond traditional mean-based metrics to focus on tail dependence, thereby providing an early signal of risk concentration. Utilizing the cross-quantilogram technique, the study develops a dynamic "Risk-at-Risk" indicator that captures the spillover of extreme downside risks between global equity markets and hedge assets. By analyzing data from 2005 to 2023, the essay quantifies risk concentration and reveals distinct patterns between advanced and emerging economies. The findings indicate that while emerging markets exhibit higher initial systemic risk, they demonstrate faster post-crisis recovery rates, potentially due to higher growth rates and capital inflows. This study advances financial risk management by providing a robust, tail-sensitive metric that serves as an effective early warning signal for the higher impact of a potential financial crisis, highlighting the heterogeneity of risk dependencies across different market conditions. Collectively, these three essays examine how uncertainty is navigated at the firm, policy, and market levels. By linking firm-level strategic behavior, policy design, and market-level risk assessment, the studies offer critical insights into how organizations and policymakers can more effectively navigate uncertainty in technological, economic, and financial environments, thus contributing to a multidimensional perspective on strategy innovation and risk.