This is a draft chapter. The final version is available in Contextual
Embeddedness of Entrepreneurship: Frontiers in European
Entrepreneurship Research edited by Mirela Xheneti, Silvia Costa,
Jarna Heinonen, Agnieszka Kurczewska, published in 2023, Edward
Elgar Publishing Ltd
https://doi.org/10.4337/9781035320684.00007
The material cannot be used for any other purpose without further
permission of the publisher, and is for private use only.
An Introduction to Contextual embeddedness of entrepreneurship  
Mirela Xheneti, Sílvia Costa, Jarna Heinonen and Agnieszka Kurczewska 
It is well established that entrepreneurial behaviour reflects the environment in which individuals 
/ organisations are embedded in (Zahra, 2007; Welter 2011). Following a recognition that 
‘economic activity is embedded in social relations’ (Granovetter, 1985: 487) led to a view of 
entrepreneurship as a social phenomenon. This line of theorising has been developed over the years 
to incorporate the multifaceted dimensions of the context where entrepreneurship is situated 
(Welter 2011; Wigren-Kristofersen et al., 2019). Variations in the institutional, social and spatial 
relations entrepreneurship is embedded in, have been found to create very different within and 
across nations’ conditions for entrepreneurial ventures (Baker et al., 2005: 498) through the access, 
and lack thereof, to resources and opportunities. Unsurprisingly, entrepreneurship researchers 
attempting to explain entrepreneurial behaviour and entrepreneurial processes have tried to unpack 
these different contextual influences.  
Many entrepreneurship studies have researched embeddedness in the context of social networks 
(Jack and Anderson, 2002; Jack, Drakopoulou Dodd, and Anderson, 2008), institutions (Welter 
and Smallbone, 2011; Thornton et al., 2011; Welter et al., 2018), families (Aldrich and Cliff, 2003; 
Xheneti et al., 2019), gender (Yousafzai et al., 2019), localities (Kalantaridis and Bika 2006; 
Korsgaard et al., 2015) amongst other contexts and have utilised various theoretical approaches to 
capture this contextual diversity. Theories such as social network theory, social capital theory, 
human geography or institutional theory have been used to highlight the embeddedness of 
entrepreneurship in networks, social capital, places and institutions respectively (Korsgaard et al., 
2022: 2015). While this has limited theorisation to one dimension of context, a smaller, but 
growing number of studies, has tried to disentangle multidimensional aspects of entrepreneurial 
embeddedness. For example, studies of women entrepreneurship have recently highlighted the 
embeddedness of women entrepreneurship in multiple contexts – family, social, institutional, 
societal (Welter and Smallbone, 2010; Yousafzai et al., 2019; Hugh and Jennings, 2020). 
As the body of work on embeddedness develops further, it becomes apparent that some long-
standing themes find renewed interest in entrepreneurship research to reflect the changing external 
environment for entrepreneurship as a result of policy changes, societal challenges, technological 
developments or crises. For example, the theme of social networks in embeddedness research that 
focuses on the differential access to resources and legitimacy stemming from network positionality 
and connections of the entrepreneur in social structures (Anderson and Jack, 2002; Jack, 
Drakopoulou Dodd, and Anderson, 2008) has seen an application in the literature on ecosystems, 
digital entrepreneurship and to some extent crises such as the pandemic. The literature on 
ecosystems highlights the role that intermediaries such as accelerators play in facilitating network 
and resource access of the start-ups embedded in the ecosystem (Brown et al., 2019). The growing 
literature on digital entrepreneurship, on the other hand, takes the issue of networking and 
interactions to the digital ecosystem realm (Sussan and Acs, 2017; Krauss et al., 2019).  
 
Another long-standing theme of embeddedness research is rooted in human geography. It is mainly 
concerned with place as the representational or symbolic dimension of the spatial context (Kibler 
et al., 2015; Müller and Korsgaard, 2018; Redhead and Bika, 2022). For example, being embedded 
in close-knit communities (often in peripheral areas) encourages a sense of collaboration and 
cooperation that helps entrepreneurs respond to the common environmental challenges or crises 
events (McNaughton and Gray, 2017). This theme becomes even more important with the 
emergence and development of social enterprises that are committed to the co-creation of solutions 
in response to the challenges in the environments where they operate (Seelos et al., 2011). Studies 
have suggested that they leverage features of place including place-based relational networks to 
develop and shape it through their actions (Kilpatrick et al., 2021)  
 
What becomes evident from this discussion and articulated into detail in Korsgaard et al. (2022), 
is that embeddedness is a dynamic and multidimensional concept that changes over time and 
encompasses multiple levels of analysis. The studies in this volume engage implicitly or explicitly 
with a number of these conversations and propose fruitful avenues for further research that are 
sensitive to these ‘embedding processes, acknowledging past, present and future imaginations’ 
(Wigren-Kristoferson et al., 2022: XX; see also Redhead and Bika, 2022). We now introduce the 
chapters in this Volume.  
 
 
  
Part I: Place Embeddedness  
 
In Chapter 2 Merouani, Box, Larsson and Rytkönen - Surviving on the island. linking firm survival 
and contextual factors in a peripheral region - respond to calls for a better understanding and focus 
on a neglected context in the literature on entrepreneurship – the peripheral regions which are often 
burdened with depopulation, deficient infrastructure, dependence on seasonal economic activities, 
and other various economic challenges for residents and businesses. Their study aims to highlight 
the conditions for entrepreneurship in these regions that make firm survival over time possible by 
taking a longitudinal approach. Theoretically, they use insights from economic geography to 
highlight the challenges that stem from ‘islandness’, yet, maintaining that although many spaces 
might have lost their economic rationale, they maintain strong social relations and a sense of 
community that support entrepreneurship and chances of firm survival. They investigate this 
interplay between the peripheral contexts of island and archipelago communities and firm 
outcomes, paying special attention to spatial variations over time. The study focuses on the 
survival of all firms active on 17 islands in the Stockholm Archipelago, Sweden, during a 20-year 
period (2000-2020). Using longitudinal multilevel modelling, the study indicates that – despite the 
seemingly ‘homogeneous’ context – differences in factors relating to market dynamism and 
infrastructural and institutional support, however small, have substantial effects on the conditions 
for everyday entrepreneurship in these communities. Access to (or the introduction of) fibre 
broadband, kindergartens, and year-round grocery stores increased firms’ survival chances over 
the 20 years of observation. In addition, the number of voluntary associations, an indication of the 
local trust and social cohesion in the region supported firms (survival) in their local communities. 
Overall, the chapter shows how different spaces (i.e. islands) change at different speeds, affecting 
the context for entrepreneurship and highlighting the dynamics of the context-entrepreneurship 
relation.  
 
Chapter 3 by Kairikko, Dhaliwal and Cacciolatti entitled Entrepreneurial micro-ecosystems: a 
study on connectedness and collaboration in the edtech community, has a focus on the edtech 
micro-ecosystem within the entrepreneurial ecosystem in the Helsinki region in Finland and 
highlights the connected and collaborative community practices developed within this micro-
ecosystem. Theoretically, the chapter engages with the micro-level approach of entrepreneurial 
ecosystems, which has received increased attention because of its concern with how entrepreneurs, 
intermediaries, and stakeholders within an ecosystem connect and collaborate. The focus of this 
approach has shifted scholarly attention from the structural features of the ecosystem to the sense 
of community that characterizes such ecosystems fostering as a result the collaboration amongst 
its actors, which in turn shapes the ecosystem. In order to analyse these processes in practice, the 
chapter uses a single case study of the emerging edtech community in Finland during the time-
period 2016-2019.  
 
The Finnish ecosystem is very relevant to study the edtech micro-ecosystem due to both the start-
up boom that has characterised the recent years and its reputation for high quality education. The 
start-up boom in Finland has been manifested by an increasing support for start-ups through public 
and private accelerators, as well as growth in start-up investment. The emergence of the edtech 
community, on the other hand, reflects the paradigm shift in learning and the technological 
advancements of recent times have opened up many opportunities in the education technology and 
learning solutions sector. The study relies on extensive data collecting consisting of 42 interviews, 
51 different observations (accelerator training, pitches, social events etc.) and documents. The use 
of multiple methods of data collection including researcher engagement in the field, provides rich 
data that illustrate the collaboration and connectedness in the edtech ecosystem in Helsinki. The 
chapter highlights the role of the accelerator as ecosystem builder supporting processes of 
connectedness and collaboration including peer support. The study shows how by assuming this 
role the accelerator is able to connect start-ups that participate and those that do not participate in 
accelerator programmes. The chapter is rich of contextual detail and contributes further to debates 
about the bottom-up approach in entrepreneurial ecosystem literature that focuses on what 
entrepreneurs and other actors do and how they engage within the community. These findings have 
implications that go beyond this particular case to include community dynamics in other industries 
within the broader ecosystem. It shows that although collaboration and connectedness are a form 
of collective action, they might not emerge without effort and support by intermediary 
organisations.  
 
Chapter 4 by Gravié-Plande and Martine Hlady-Rispal, Deconstructing how a sustainable business 
model shapes value within a territorial ecosystem, delves into issues of space by placing a 
particular emphasis on the relational nature of space and the interactions between multiple 
stakeholders in the ecosystem in shaping the diverse forms of value that a sustainable enterprise 
creates. The chapter engages specifically with the concept of value shaping within what is referred 
to as a territorial ecosystem. This brings to the attention of the reader the geographical boundaries 
of relevance to an understanding of how multiple actors in the ecosystem exchange and shape the 
value flows and contribute towards developing a sustainable business model.  
 
In order to understand how value is shaped in this context, the authors use an autoethnographic 
case study of Terra Garona a social enterprise in the Bordeaux region in the southwest of France 
whose mission is to leverage on the region’s tradition with river tourism to preserve, renovate, and 
construct old sailing ships. The autoethnographic nature of the project refers specifically to the 
engagement of the researchers in developing the business model for this enterprise. The case study 
was developed over several years comprising the period between 2014-2017 and it illustrates the 
collective nature of innovation through the collaboration of a multitude of actors, such as 
consumers, associations, public institutions, private organisations and the territory in a shared 
project. The chapter provides several novel insights in relation to the entrepreneurial nature of such 
collective projects whereby the value-shaping process, a process that the analysis shows to be 
driven by local culture can contribute to the development of sustainable business models. Overall, 
this chapter aims to show how territory and the ecosystem therein plays an important role in how 
different stakeholders work together in shaping value.  
 
Another key theme in this book taken forward by Slitine and Chabaud (Chapter 5) in their work 
on social enterprises relates to how entrepreneurs are embedded in space and aim to shape it 
through their actions. Their chapter entitled, The evolution of an organizational form from social 
enterprise to territory enterprise, uses an institutional entrepreneurship lens to demonstrate how a 
social enterprise changes and modifies its organisational form in order to adapt to the challenges 
faced in their community through a territory enterprise, defined as organisations that are anchored 
in their territories and respond to the variety of social issues in these territories. Through a 
longitudinal case study of the Archer Group located in Romans-sur-Isère (France) spanning the 
time period from 1987 to 2022, the chapter traces the creation, development and change over time 
of the Archer group in order to be able to best respond to its mission and the evolving social issues 
in its environment. The chapter illustrates how the group’s founder and leader gradually 
transformed a work integration social enterprise (WISE) into a ‘territory enterprise’ whose goal is 
to mobilize the entire local community in service of sustainable local development. By using a 
process approach, the study investigates a social enterprise’s evolution to adapt to the challenges 
of the territory, as well as the actions of an institutional entrepreneur. The concept of the ‘territory 
enterprise’ has recently emerged in the literature on social and sustainable enterprises and the study 
contributes not only to a deeper understanding of its working as a form of social enterprise but also 
the wider debates on how (social) enterprises relate to space. 
 
Part II: Institutional and digital embeddedness 
 
Ciccarino in Chapter 6 - Comparative cases from Portuguese social innovation public policy, looks 
at the role government support can play in fostering social innovation and sustaining social change. 
She takes the view that social innovation can be sustained through the efforts of governments in 
creating synergies between different stakeholders including the private sector. She investigates 
these issues in the context of Portugal, a European country that has developed a pioneer public 
policy to encourage entrepreneurship, social innovation and boost the social investment market. 
The chapter focuses specifically on the case of the Portugal Social Innovation Programme (PIS) 
whose aim is to link investors with social entrepreneurial initiatives (SEI) and offers support to 
structure SEI in a sustainable way by providing access to resources and networks. Insofar as the 
SEIs accomplish the contracted results, PIS reward their private investors. The programme is based 
on the premise that public and private capital share risks, and the public capital funds the most 
effective initiatives. PIS, is used in this chapter as an example of a governmental programme that 
enables the experimentation required for innovation building and increases the chance of public 
services improvement, eventually contributing to an enhanced welfare-state. To illustrate the 
workings of this programme, the chapter uses data from a database of 120 cases that have been put 
together through survey and interview data. More specifically, the chapter focuses on three distinct 
cases supported by PIS, analysed through content analysis and compared across various different 
investment criteria. The analysis provides the links between PIS investment criteria and SEIs types 
supported. Overall, the chapter shows that PIS has great innovative potential in building networks 
and fostering the entrepreneurial ecosystem.  
Chapter 7 from Hakola and Sarna, Motivation behind alternative growth modes in SMEs: a 
systematic literature review, deals with a longstanding topic in entrepreneurship research – firm 
growth. Through a systematic literature review they set to understand the antecedents of small 
business growth. Their starting point is that despite considerable attention to the topic from 
scholars in the entrepreneurship and strategic management research areas, knowledge about small 
firm growth remains fragmented and inconclusive. The chapter suggests that the evidence to date 
has been accumulated by primarily focusing on large firms neglecting the fact that smaller firms 
have different motivations for growth and hence, choose different modes of growth.  
 
The chapter is based on a systematic analysis of 72 empirical studies on SMEs to present an 
integrative framework of the major motives behind internal (organic), external (acquisitive), and 
hybrid growth modes in small firms. More specifically, the study builds upon the recent study by 
Ego (2022) by focusing on SMEs only. This focus revealed that SMEs differ when it comes to 
antecedents of growth. The synthesis review concluded that SMEs select organic growth due to 
internal reasons: resource specificity, objective to control growth process, entrepreneur’s 
characteristics, and product development strategy. Meanwhile, acquisition growth is mainly 
explained by an organizational strategy to differentiate and innovate, firm structure, 
microenvironmental factors and multiple growth goals. Hybrid growth, on the other hand, is 
chosen due to an SME’s specific strategic choices, availability of resources, interfirm connections, 
and favourable macroenvironmental factors. Thus, a focus on SMEs reveals important antecedents 
of growth such as organizational structure, growth imitation, and the entrepreneur. Market 
regulations and sociocultural factors were not as important as growth antecedents in the context of 
smaller firms. Overall, the study responds to calls for a systematic understanding of firm growth 
particularly in the context of smaller organizations, proposing directions for further research on 
the highly debated topic of business growth.  
 
Chapter 8 by Durst, Torkkeli and Ainamo entitled The role of crises in international SMEs 
business models: An institution-based view, offers some new insights on the relationship between 
institutional conditions and international SMEs operations during crises. Entrepreneurship 
research has widely examined the role institutions play in the rate and nature of entrepreneurship. 
In the context of international SMEs, institutions of both home and host countries enable and 
constrain the internationalization process. However, the literature on firm responses to crises has 
not engaged sufficiently with the formal and informal institutional environment despite it 
undoubtedly affects the scope for firm responses and the available institutional support in the 
society.  
 
The authors move these discussions forward by developing a conceptual framework that helps in 
understanding how institutional conditions impact on the international SMEs’ responses to crises 
with a special focus on business model change. By linking insights from the institution-based view 
of strategy with research on business model change in international entrepreneurship, this study 
proposes four different types of business models that highlight the circumstances or situations the 
organization is exposed to in the institutional environment in times of an external crisis. Type I 
(innovative) and II (reactive) business models are of companies operating in countries with stable 
and supportive institutions but with different temporal orientations of the entrepreneur, whether to 
the future or the current time period. Type III (retrenchment) and IV (exit) business models are of 
companies that operate in contexts characterized by ill or poorly functioning formal and informal 
institutions exacerbated further by the crisis event. The model this chapter proposes contributes in 
various ways to the literature. It integrates various theoretical bodies of work and acts as a starting 
point for future empirical studies examining business models, crisis and resilience in the context 
of SME internationalisation. 
 
The final chapter (9) by Wasilczuk and Heinonen entitled I love to write and create. Can I earn 
money doing it? Entrepreneurial process of bloggers, explores other external conditions for 
entrepreneurship. They look at the increasing role of technological developments and new digital 
opportunities for new and emerging forms of entrepreneurship. Although the role of digitisation 
as an external enabler of entrepreneurship is widely recognised because IT solutions and web 
applications shape the concepts of entrepreneur, entrepreneurship, and the entrepreneurial process, 
the topic remains under-researched. The chapter aims to respond to these calls for a better 
understanding of digital entrepreneurship and digital entrepreneurial processes by focusing on 
entrepreneurship taking place via social media.  
 The study explores blogging and the entrepreneurial process of bloggers by using netnography - a 
relatively novel research method - to analyse the cases of four Polish bloggers and their blogs 
during the time period 2020-2022. The findings suggest that the entrepreneurial process of 
bloggers consists of three phases: legitimisation, monetisation, and professionalisation. Blogging 
plays a role as a hobby, passion, and source of income, and for their audiences and clients a form 
of entertainment and source of support and information. Digitisation is seen in this study to support 
passions and hobbies turn into profitable businesses. Interestingly, the study also highlights the 
ways in which bloggers communicate and interact with readers and thus capitalise on an 
opportunity to verify their ideas about products and services on an ongoing basis. The reader/client 
is not only a stakeholder by being a peer of products offered but also the co-creator of the content 
provided. The study emphasises the role that the audience/prospective client engagement plays in 
the success of the monetisation of a blog. Overall, the study suggests that social media and related 
opportunities, earning modes, and entrepreneurial processes develop rapidly and thus represent 
compelling avenues for future research. 
 
OUTLOOK 
This Anthology illustrates the breadth and rigour of European entrepreneurship research. The 
chapters illustrate the range of approaches undertaken to study entrepreneurial behaviour and 
process but also a commitment to studying entrepreneurial processes through methods that are 
more attuned to this processual nature. The chapters in this Anthology have relied on longitudinal 
designs and have used a wide range of methods of data collection. A common thread crossing 
through the chapters in this volume is the embeddedness of entrepreneurship in multiple contexts 
and in particular, its role in shaping these contexts over time. The volume shows the continuous 
evolution of entrepreneurship research, and we hope it will stimulate further research agendas and 
approaches. 
 
 
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