How Do Successful Innovation Ecosystems Emerge?

Milthon Lujan Monja

Source: iStock
Source: iStock

Innovation ecosystems (think Silicon Valley for technology or Hollywood for film) are bustling centers where innovative ideas take flight. But how do these intricate networks of collaboration and creativity truly come to life?

For years, innovation ecosystems have been dissected and analyzed, and their growth trajectories have been mapped like complex scientific experiments. However, what remains shrouded in mystery is the very “spark” of life, the path leading from scientific curiosity to a thriving ecosystem pulsating with invention.

A new article published in the Journal of Management Studies by Professor Lavie and Issy Drori from VU University in Amsterdam explores how an innovation ecosystem might eventually overcome obstacles that have prevented its emergence for many years.

Traditional research has focused on the evolution of ecosystems once they have taken root, meticulously tracing their growth, expansion, and adaptation. However, the new research takes a step back and examines the genesis of nascent ecosystems, analyzing the factors that truly propel them into existence.

Innovation Ecosystems

An innovation ecosystem is defined as the alignment structure of government, university, and other actors interacting to promote the innovation and commercialization of a central technology as their common value proposition.

Lavie and Drori’s research delves into a little-studied territory, analyzing the fascinating case study of Israel’s nanotechnology ecosystem. This flourishing field, promising transformative applications in medicine, energy, and more, offers a perfect window into understanding the birth of an innovation ecosystem.

Case Study: Israel’s Nanoecosystem

The Israeli case is particularly useful for such a study because Israel is a small country with a limited number of institutions whose role could be examined both individually and in interaction with other institutions. Lavie and Drori used data from 40 in-depth interviews with various prominent figures from academia, government agencies, and industry, a survey of almost 300 scientists, and a wealth of archival data from various sources.

Genesis of Innovation Ecosystems

More than technological obstacles, the process of establishing an Israeli nanotechnology ecosystem was initially stifled by organizational obstacles. These included inefficient and fragmented bureaucracy, inefficient resource management, and conflicting agendas of government and universities. This unfavorable framework, which had effectively hindered the emergence of an ecosystem for almost 20 years, finally unlocked when two seemingly unrelated circumstances occurred:

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Informal Organization

First, an informal organization – the Forum for Research Infrastructure – began to compensate for deficiencies in government ministries. This team, operating alongside existing formal structures, brought together government officials who could then operate as a collective pooling their resources.

Then, the Russell Berrie Foundation, based in the United States, pledged a significant donation to Technion (Israel’s leading scientific university) with the condition that the Israeli government and Technion itself matched the funds, prompting all other universities to follow this triangular donation model to sponsor their research in nanotechnology research centers.


This made the transition to what Lavie and Drori call “coopetition” possible. Coopetition means simultaneous competition and cooperation among actors. In this case, cooperation emerged despite the inherent initial state of competition, giving rise to different types of cooperation: for resources, direction, administration, and identity.

This transition was driven by the understanding among actors that competition had prevented them from implementing their private agendas, and cooperation was inevitable. At that point, the process was in full swing, and only the relatively easy task of devising and establishing regulatory mechanisms to enable and govern the ecosystem remained.

Key Findings

The study’s findings reveal a surprising truth: the early stages of the emergence of ecosystems are not paved with seamless collaboration. Instead, they are plagued by “organizational bottlenecks.”

Imagine it as a massive wall built from well-intentioned yet conflicting government and university agendas, coupled with resource constraints and the slow inertia of bureaucracy. This dam hinders the flow of innovation, preventing researchers, investors, and entrepreneurs from coming together and turning fledgling ideas into tangible realities.

But here’s the twist: within this same limitation lies the key to unlocking the dam. The research shows that the emergence of the Israeli nanoecosystem depended on the creation of “dedicated units,” independent of the clutches of bureaucracy and conflicting agendas. These units, acting as innovation bridges, fostered a unique “coopetition.” This cooperation, manifested in shared resources, expertise, and strategic direction, eroded the wall, allowing innovation to flow.

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Enabling and Governing Mechanisms

But the story doesn’t end there. The research sheds light on the crucial role of enabling and governing mechanisms. These mechanisms, akin to those of skilled engineers, act as a framework for the nascent ecosystem. They legitimize its existence, provide essential resources, and guide its evolutionary path. Think of them as scaffolding that allows the fragile ecosystem to ascend toward self-sustained maturity.

The implications of our findings are far-reaching. On one hand, it challenges the traditional “evolution-centered” approach to innovation ecosystems, providing much-needed insight into their delicate birthing pains. Secondly, it sheds light on the fundamental role of cooperation, particularly between seemingly disparate entities like universities and governments, in facilitating the emergence of ecosystems. Lastly, it underscores the importance of having robust enabling and governing mechanisms as a nurturing cradle for nascent ecosystems.

Lessons Learned

The lessons learned from Israel’s nanotechnology ecosystem have tremendous value beyond its borders. The research offers a novel framework for understanding how innovation ecosystems emerge, shedding light on the critical functions of:

  • Overcoming organizational bottlenecks, not just technological ones.
  • Embracing cooperation as a powerful tool for fostering collaboration.
  • Implementing robust enabling and governing mechanisms to nurture the ecosystem.

By applying this knowledge, policymakers, researchers, and entrepreneurs worldwide can foster the birth of innovation ecosystems, paving the way for innovative advancements in various fields.

Remember, the next Silicon Valley or Hollywood may not be born from a flash of inspiration but from the patient dismantling of organizational obstacles and the fostering of a collaborative spirit.


In conclusion, the research uncovers the fascinating secrets behind the birth of Israel’s nanoecosystem. It is a story not only of scientific brilliance but also of overcoming organizational obstacles, embracing cooperation, and fostering a supportive environment. As we strive to cultivate innovation ecosystems worldwide, these insights offer invaluable guidance, reminding us that sometimes the most innovative breakthroughs begin not with a bang but with the patient removal of a well-intentioned but obstructive ‘wall.’

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We reveal how resource constraints and deficient bureaucracy create organizational barriers and reinforce conflicts, preventing the ecosystem from emerging years after the technology was discovered. For the ecosystem to emerge, these impediments must be dismantled through organizational metamorphosis and a transition to cooperation by ecosystem members, aligning their interests and pooling resources,” says Dovev Lavie.

Our theory can guide policymakers, universities, and entrepreneurs to identify obstacles delaying commercialization and shape the evolution of innovation ecosystems. We emphasize the role of informal voluntary organizations in overcoming bureaucratic obstacles and advocate for cooperation among competing actors striving for a shared mission,” concluded the researcher.

Dovev Lavie
Department of Management and Technology, Bocconi University
Via G. Roentgen 1, 20136 Milano MI, Italy

Reference (open access)
Drori, I. and Lavie, D. (2023), How Do Innovation Ecosystems Emerge? The Case of Nanotechnology in Israel. J. Manage. Stud..

Note: The article was crafted with information from the press release and the scientific article.

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