Universities as mechanism-makers: innovation in early-stage digital-health start-ups in a regulated ecosystem

Purpose This study aims to examine the extent to which and how universities enable innovation in early-stage (pre-seed/seed) digital-health start-ups operating under stringent regulation. We introduce the legitimacy-to-capability conversion problem and theorise three university-activated mechanisms – regulatory sense-making and shielding, credibility borrowing and gateway access, and resource bundling and sequencing – that build venture capabilities and translate into near-term outcomes. The Dutch Life Sciences and Health (LSH) ecosystem provides an analytical setting for this inquiry. Design/methodology/approach This study uses a multiple-case design, sampling early-stage ventures in the Dutch LSH ecosystem through 20 semi-structured interviews and conducting cross-case comparisons. Findings This study finds that universities act as mechanism-makers. Through M1 – regulatory sense-making and shielding delivered via ethics/legal clinics and codified action scripts, they increase start-ups’ regulatory agility (C1), which accelerates regulatory progress (O1). Through M2 – credibility borrowing and gateway access enabled by university affiliation, they build clinical access capability (C2) that culminates in a first clinical pilot (O2). Through M3 – resource bundling and sequencing within translational programmes and incubators – they strengthen validation capability (C3), enabling the first hospital contract and early revenue (O3). These effects are most pronounced for pre-seed/seed ventures, lower regulatory classes, permissive technology-transfer policies and mature ecosystems. Importantly, university ambidexterity is realised not as a generic balance but through specialised mechanisms. Originality/value This study articulates and evidences three mechanisms – regulatory sense-making, credibility borrowing and resource sequencing – through which universities convert institutional legitimacy into venture capabilities and innovation outcomes in regulated health settings. This study specifies moderators, countermechanisms and a reinforcing loop, and clarifies how university ambidexterity manifests through unit-level specialisation.