How do innovation ecosystems emerge? The case of nanotechnology in Israel

Research on innovation ecosystems has identified their evolution phases but neglected their emergence, which we know little about. We offer inductive theory to explain the emergence of the nanotechnology ecosystem in Israel. Our theory suggests that ineffective bureaucracy, resource constraints, and the conflicting agendas of the government and universities create organizational bottlenecks that impede the ecosystem’s emergence. Only once these actors establish related dedicated units that are immune to these deficiencies and transition to simultaneous competition and cooperation does the innovation ecosystem begin to emerge. We further reveal how enabling and governing mechanisms that legitimize the innovation ecosystem, facilitate its emergence, and direct its evolution trajectory. Hence, we extend research that has centered on subsequent phases of evolution and explain how actors interact to facilitate the emergence of the ecosystem following technological discovery. Our study contributes to strategy research on interfirm coopetition by applying this concept to government and university actors, and by alluding to its multiple facets: identity, direction, administration, and resources. We also complement innovation research on the post-formation dynamics of ecosystems by providing insights into the missing link between technological discovery and the creation of an innovation ecosystem that brings together stakeholders to commercialize that technology.