Scaffolds and Intermediaries : How Changing Institutional Infrastructure Can Alleviate Knowledge Barriers to Entrepreneurship

Can institutional changes reduce knowledge barriers to entrepreneurship and if so, how do they alleviate these barriers? We propose and test one possible approach – changing institutional infrastructure. We focus on two forms of institutional infrastructure: institutional scaffolds that enhance the market relevance of technical knowledge and institutional intermediaries that link two or more disparate parties to bring about activities that would not occur otherwise. To understand how institutional infrastructure can alleviate knowledge barriers to entrepreneurship, we focus on the case of the Chinese Academy of Sciences (CAS)' Knowledge Innovation Program (KIP) – a program aimed at better connecting CAS science to markets. Through our qualitative fieldwork, we observe that after KIP, CAS institutes were better equipped to host institutional scaffolding that could more tangibly demonstrate market applications for its science. At the same time, we observe that science parks served as institutional intermediaries to better link such scaffolding to suitable entrepreneurs and support services. Our quantitative analyses show that after KIP, founding rates increase, especially in those provinces with more local CAS institutes. Moreover, those firms founded after KIP were more likely to subsequently locate inside science parks. These changes to institutional infrastructure seem particularly important in nascent clusters. Our study contributes to those studies at the nexus between institutional change and entrepreneurship by highlighting knowledge barriers to entrepreneurship and the institutional infrastructure that can help alleviate them