Entrepreneurial Ecosystems As Amplifiers of The Lean Startup Philosophy – Management Control Practices In Earliest-Stage Startups

Entrepreneurial ecosystems play a key role in the development of startups by not only providing support – such as flexible office space and access to skilled employees, mentors and investors – but moreover by promoting concrete ideals about ‘good’ entrepreneurship. In our empirical analysis of management control systems (MCSs) in earliest-stage startups, we witness a strong influence of such ideals – above all the Lean Startup philosophy – on the MCSs analyzed. Building on cross-sectional field study data resulting from a comprehensive field-immersion strategy and 50 interviews with key actors in an entrepreneurial ecosystem as well as with founder-managers of startups, we consider the entrepreneurial ecosystem as a collective meso-level community that mediates between macro-level institutional pressures and micro-level practices of startups. We show how this community – through a variety of what we term amplifying mechanisms – not only actively deinstitutionalizes a legacy entrepreneurial philosophy epitomized by the business plan concept but propagates the Lean Startup philosophy so that this alternative has become the dominant institutional philosophy in the studied ecosystem and its startups. Due to the amplifying mechanisms exerted by the meso-level, startups use MCSs that play a crucial role in the rapid experimentation and learning process towards finding a scalable business model that is characteristic of the Lean Startup philosophy. We theorize this role of MCSs through the lenses of interactive and enabling control systems and make these concepts amenable to multi-level entrepreneurial settings