Innovations and Entrepreneurial Ecosystems: A Structural Equation Modeling Approach

Abstract: This study investigates the impact of substantial process and product innovations on entrepreneurial ecosystems and territorial competitiveness. While innovation is widely recognized as a driver of economic development, the specific mechanisms through which different types of innovation influence local entrepreneurial dynamics remain underexplored. This research aims to bridge this gap by examining how innovation fosters collaboration, enhances service diversification, and strengthens entrepreneurial support networks. The study is based on a survey of 223 Moroccan companies from diverse industries and regions, ensuring a representative sample of the entrepreneurial landscape. The dataset covers businesses of varying sizes, revenue levels, and sectors, providing a comprehensive view of the relationship between innovation and territorial development. The analysis employs Structural Equation Modeling (SEM) to assess the direct and indirect effects of substantial innovation on entrepreneurial ecosystems. Process innovation is measured through improvements in working conditions and environmental sustainability, while product innovation is evaluated based on product renewal and the development of environmentally friendly goods. The entrepreneurial ecosystem is assessed through indicators such as business support networks, service diversity, and institutional collaboration. The findings reveal that process innovation significantly enhances local collaboration and ecosystem sustainability, particularly when focused on environmental improvements. Product innovation contributes to entrepreneurial ecosystem vitality by diversifying service offerings and fostering strong support networks. However, the study also highlights the necessity of balancing innovation efforts with entrepreneurial flexibility to sustain long-term competitiveness. Keywords: Process Innovation, Product Innovation, Entrepreneurial Ecosystems, Territorial Competitiveness.