Innovation and entrepreneurial ecosystems: fintech in the financial services industry

Alexander Berman, Marcelo Cano-Kollmann and Ram Mudambi
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Alexander Berman: St. John’s University
Marcelo Cano-Kollmann: Ohio University

Review of Managerial Science, 2022, vol. 16, issue 1, No 3, 45-64

Abstract: Abstract Technological change that arises outside an industry and is used within it affects entrepreneurship and entrepreneurial ecosystems, but remains understudied. In this project we assess the role of financial technology (fintech) innovation in the process of firm entry into the investment advisory sector, bearing in mind that the core of this innovation arises from technological development that is external to the industry. Our analysis of a sector of the U.S.-based financial services industry indicates that fintech innovation has contributed to a substantial increase in the rate of entrepreneurial entry into the industry. More importantly, we show that this innovation has an asymmetric effect on the firms in the industry, strengthening startups and smaller firms while increasing competitive pressure on larger incumbents. Our findings contribute to the literature by exemplifying that external technology shocks can change market structure by strengthening entrepreneurial ecosystems.

Keywords: Technological change; Fintech; Entrepreneurial ecosystems; Innovation; Information technology (IT) (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (15)

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DOI: 10.1007/s11846-020-00435-8

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