The Embedded Dynamics of Entrepreneurial Innovation: Inter-Firm Networks and Institutional Moderators

Abstract

Entrepreneurs’ inter-firm networks play a pivotal role in fostering entrepreneurial activity and driving innovative performance. Collaborative networks are widely recognized as critical to innovation, as they facilitate the generation, exchange, and diffusion of knowledge. Building on the open innovation paradigm, this study investigates how inter-firm networks, embedded within institutional and cultural contexts, influence entrepreneurial innovativeness across countries. Drawing on Global Entrepreneurship Monitor (GEM) data from 68 countries and applying a hierarchical linear modeling approach, we examine how the structure and diversity of inter-firm networks affect innovation, and how institutional factors—such as trust, human development, and intellectual property protections—moderate these relationships. The findings highlight the significance of both network characteristics and institutional environments in shaping entrepreneurial innovation, offering valuable insights for theory development and policy design.