Entrepreneurial ecosystems, economic complexity, and venture-oriented entrepreneurship in German regions

Abstract This paper examines how regional economic complexity is associated with entrepreneurial outcomes in German labor market regions. Drawing on entrepreneurial ecosystem research, we conceptualize economic complexity as one structural dimension of the regional capability base and distinguish between industrial, technological, and occupational complexity. We relate these dimensions to the regional share of high-growth firms, gazelles, venture-capital-backed firms, and venture capital volume per capita, while also considering broader regional performance indicators. Using panel models with region and year fixed effects, we find that the relationship between complexity and entrepreneurial outcomes is selective and heterogeneous across dimensions and outcomes. Industrial and technological complexity are more consistently associated with high-growth firms and broader regional growth indicators, whereas occupational complexity appears more relevant for gazelles. Venture-capital-related outcomes also display positive associations with regional complexity, with industrial complexity showing the most robust relationship. These findings contribute to entrepreneurial ecosystem research by showing that regional capability structures are related to growth-oriented and venture-oriented entrepreneurship in distinct ways across different dimensions of complexity. More broadly, the paper demonstrates how economic complexity can be incorporated into the analysis of entrepreneurial ecosystems without treating it as a comprehensive measure of ecosystem quality.