# Close but not nearby? Rethinking proximity in the digital era of entrepreneurial ecosystems

Olivier Lamotte

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## To cite this version:

Olivier Lamotte. Close but not nearby? Rethinking proximity in the digital era of entrepreneurial ecosystems. Journal of Business Venturing Insights, 2025, 23, pp.e00521. 10.1016/j.jbvi.2025.e00521. hal-05058781

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# Close but not nearby? Rethinking proximity in the digital era of entrepreneurial ecosystems

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Olivier Lamotte

Métis Lab, EM Normandie Business School, France

## ARTICLE INFO

**Keywords:**

Entrepreneurial ecosystems

Proximity

Digitalization

## ABSTRACT

Recent literature has increasingly challenged the traditional view of entrepreneurial ecosystems (EEs) as geographically bounded entities, highlighting how entrepreneurial activities span spatial boundaries through networks, digital platforms, and various forms of collaboration. Building on these insights, this article proposes an analytical framework based on the proximity approach to understand better how EEs function in an increasingly digitalized world. We argue that while geographic proximity remains relevant, other forms of proximity (cognitive, social, organizational, and institutional) are equally crucial in shaping resource interactions and coordination within EEs. We also examine how digitalization transforms these proximity dynamics, creating new possibilities for entrepreneurial activities while potentially reducing the importance of geographic proximity. The key insight of our study is that beyond mere geographic closeness, diverse forms of proximity shape actors’ interactions within EEs, while digitalization reconfigures these dynamics, extending EEs boundaries. This research contributes to the literature by offering a more nuanced theoretical framework for understanding the spatial and non-spatial dimensions of EEs, with implications for both research and policy.

## 1. Introduction

The traditional view of entrepreneurial ecosystems (EEs) as geographically bounded systems confined to specific cities, regions, or countries (Malecki, 2018) is increasingly challenged by empirical evidence and theoretical developments. Recent studies have shown that entrepreneurs regularly access resources and networks across spatial boundaries (Muldoon et al., 2023; Audretsch et al., 2024; Schäfer et al., 2024). This spatial unboundedness is further amplified by digitalization, which enables new forms of entrepreneurial interactions beyond geographic constraints (Braune and Dana, 2022; Audretsch et al., 2024; Marquardt and Harima, 2024; Tsukanova et al., 2024).

This evolution calls for new theoretical frameworks to understand how EEs function beyond geographic boundaries. The proximity school literature, initiated by a group of French researchers in the 1990s, offers a particularly relevant analytical tool, as it emphasizes that proximity cannot be reduced to its geographical dimension (Torre and Rallet, 2005; Torre and Gallaud, 2022; Zimmermann et al., 2022). This approach considers other forms of proximity: organized proximity (Rallet and Torre, 1995), cognitive, social, organizational, and institutional proximity (Boschma, 2005). It helps to understand how EE actors interact and coordinate across space and how these proximities matter for success. The proximity school has proven useful for analyzing various economic phenomena where interaction and coordination matter (Zimmermann et al., 2022). For instance, it has helped explain why some clusters succeed in
fostering collaboration while others fail (Ben Letaifa and Rabeau, 2013), how various forms of proximity enable or hinder innovation processes in knowledge-intensive industries (Torre, 2014), and how stakeholder proximities are critical to the success of circular economy projects (Chembessi et al., 2024). It also helps to understand how different forms of proximity complement or substitute for each other, how they evolve, and how they are transformed by digitalization. Surprisingly, apart from the works of Yamamura and Lassalle (2020) and Santos et al. (2025), the proximity approach has not been fully leveraged to understand and theorize EEs, despite offering valuable perspectives.

Our paper makes three main contributions. First, we develop a conceptual framework that helps to understand the spatial and non-spatial dimensions of EEs, with particular attention to how different forms of proximity can be leveraged to support resource interaction and coordination. This is particularly critical given that EEs are "fundamentally interaction systems comprised of loosely connected, hierarchically independent, yet mutually co-dependent stakeholders" (Autio, 2016, p. 20). This echoes Sternberg's (2022) recommendation to enhance interdisciplinary research within the context of geographically sensitive entrepreneurship studies. Second, we examine how different forms of proximity interrelate, complement one another, and evolve to enable collaboration between the multiple actors within EEs. Third, we explore how digitalization transforms these proximity dynamics, creating new possibilities for interaction while potentially reducing the importance of geographic proximity. As highlighted by Sternberg (2022), digitalization holds significant potential to become a central focus in future research on the interplay between geography and entrepreneurship.

## 2. Rethinking the spatial boundaries of EEs: From geographic anchors to relational networks

### 2.1. Traditional geographic boundaries

Research on EEs has historically emphasized spatial boundedness, conceptualizing EEs as geographically defined systems anchored in specific territories (Fischer et al., 2022). This perspective builds on a long tradition in economic geography, beginning with Marshall's analysis of industrial districts which identified three key benefits of spatial concentration: specialized labor markets, specialized suppliers, and knowledge spillovers. Subsequent studies on Italian industrial districts, innovative clusters, and regional innovation systems further developed these ideas. At the core of this approach is the role of knowledge flows. Tacit knowledge, which is difficult to codify and transmit, has been considered inherently local, requiring regular face-to-face interactions between actors (Feldman, 1994). Geographic proximity also enables the creation of trust and collaboration networks through repeated interactions that build social capital over time (Nilsson, 2019). Another crucial mechanism relates to institutional density. Local institutions, both formal (organizations, rules) and informal (norms, routines), develop through proximity to create a supportive environment for entrepreneurship (Andersson and Henrekson, 2015). These institutions reduce uncertainty, provide resources, and enable coordination between actors. The positive role of geographic concentration was further reinforced by studies of successful entrepreneurial regions like Silicon Valley, where agglomeration appeared to create unique advantages (Saxenian, 1996; Engel, 2015). These cases suggested that spatial proximity fostered informal knowledge exchange, facilitated resource sharing, and created distinctive entrepreneurial cultures that were difficult to replicate elsewhere.

### 2.2. Challenging geographic boundaries of EEs

Recent research increasingly questions the assumption that EEs are inherently spatially bounded, suggesting that while geographic proximity can be beneficial, it is not sufficient to fully explain their functioning and success (Fischer et al., 2022; Audretsch et al., 2024; Schäfer et al., 2024). Empirical studies reveal that contemporary entrepreneurs regularly access and mobilize resources beyond their local ecosystems, often relying on connections that span multiple locations (Harima et al., 2021; Theodoraki and Catanzaro, 2022; Schäfer et al., 2024). This trend aligns with the rise of global knowledge networks and value chains, providing new opportunities for entrepreneurial activity that transcends local boundaries (Fischer et al., 2022). Entrepreneurs increasingly participate in international networks, access global financing, and serve markets worldwide. Moreover, digital transformation has fundamentally altered how entrepreneurs access resources and knowledge (Nambisan et al., 2019). Digital platforms enable remote collaboration, virtual networking, and resource sharing across geographic boundaries (Braune and Dana, 2022). Cloud computing and digital services make technological infrastructure accessible from anywhere, reducing the importance of physical co-location (Tsukanova et al., 2024). As Marquardt and Harima (2024, p. 9) observe, "an ecosystem's boundary can be spanned through digitalization".

In addition, although geographic proximity often supports entrepreneurial activity, research shows it can sometimes be a hindrance. Boschma (2005) highlights that proximity may lead to "lock-in" effects, fostering rigidity, closedness, and innovation inertia. Entrepreneurs in competitive contexts may instead seek distant connections to access diverse resources and reduce local constraints (Ben Letaifa and Rabeau, 2013). Moreover, proximity can intensify resource competition and increase risks like industrial espionage (Torre, 2014), while also constraining the innovativeness of new ventures because of congestion effects (Pindado et al., 2023). These findings underscore that geographic proximity is not inherently beneficial and may drive entrepreneurs to develop broader, more dynamic networks.

### 2.3. Toward a new understanding of proximity in EEs

A new conceptualization of EE boundaries is therefore emerging, shifting the focus from geographic boundaries to the interactions that underpin EE performance. As Cao and Shi (2021) argue, the essence of EEs lies in an interactional logic where structural elements (e.g., accelerators), relationships, and knowledge spillovers play pivotal roles. These interactions span a diverse array of organizations,
including entrepreneurs, universities, investors, incubators, and support entities (Theodoraki and Messeghem, 2017). Crucially, the relational dimension of EEs is inherently complex, encompassing a spectrum of relationships that range from formal contractual agreements to informal social ties (Spigel, 2017; Wurth et al., 2022). These relationships create value through multiple mechanisms, particularly through resource interactions. Moreover, the spatial configuration of EEs reflects the realities of the modern business landscape, functioning across multiple scales (Wurth et al., 2022): ecosystems integrate local, face-to-face interactions with global, digital connections, highlighting their hybrid nature. This multidimensional complexity necessitates effective coordination and governance, sometimes led by one or more orchestrators, to align diverse actors and relationships and drive EE success (Santos et al., 2023, 2025; Harima et al., 2024; Durand et al., 2024).

This reconceptualization positions EEs not only as territorially bounded entities but also as dynamic networks of inter-organizational relationships. Success increasingly depends on the ability to cultivate and sustain these relationships across spatial scales, demanding innovative approaches to coordination in a digitalized, globalized context. Given that such relationships are grounded in various forms of proximity, understanding how these dimensions enable or constrain interactions is critical for advancing both theoretical insights and practical applications.

# 3. The multiple dimensions of proximity in EEs

## 3.1. Proximity theory: foundations and key dimensions

The proximity school has developed a theoretical framework that goes beyond simple geographic considerations (Carrincazeaux et al., 2008). The novelty of this approach “lies in considering proximity as what brings actors closer, further apart or separates them and as what conditions their ability to interact and coordinate with one another” (Zimmermann et al., 2022, p. 53). This approach therefore suggests that proximity is a complex, multidimensional concept that influences how actors coordinate and interact (Torre and Rallet, 2005). Several dimensions of proximity have been identified in the various works of this school. Rallet and Torre (1995) distinguish between geographic proximity, defined as “the kilometric distance between two entities, weighted by the cost in time and money of covering that distance” (Zimmermann et al., 2022, p. 60), and organized proximity, which is “in essence relational” and represents “the ability of an organisation to make its members interact” (Rallet and Torre, 1995, p. 49). Later, Boschma (2005) identifies five key dimensions of proximity, summarized in Table 1. Regardless of its specific dimensions, there is a consensus within this school that proximity facilitates interactive learning, innovation, and entrepreneurial strategies (Bellet et al., 1992; Boschma, 2005; Torre and Gallaud, 2022; Sternberg, 2022).

Each dimension of proximity operates through distinct mechanisms while collectively contributing to the overall capacity for interaction and coordination within EEs. While geographic proximity can facilitate face-to-face interactions and knowledge exchange, it is “neither necessary nor sufficient” for effective coordination (Boschma, 2005). As Zimmermann et al. (2022) emphasize, no territory possesses “magical spatial virtues” that inherently enable successful collaboration. The other dimensions—cognitive, social, organizational, and institutional proximity—are equally critical in shaping how actors collaborate.

Importantly, these dimensions of proximity interact in complex and dynamic ways. While non-territorial proximities often

<table><caption>**Table 1**
Key characteristics of proximity dimensions.</caption><thead><tr><td>Dimension</td><td>Definition</td><td>Additional characteristics</td><td>Interactions with other proximities</td></tr></thead><tbody><tr><td>Geographic</td><td>Physical distance between actors, functionally calculated in terms of cost and/or time (Torre and Rallet, 2005)</td><td><ul><li>Also shaped by individual perception of spatial distance</li><li>Can be permanent or temporary</li><li>Not sufficient alone for knowledge exchange and coordination</li><li>Risk of local “lock-in” effect</li></ul></td><td><ul><li>Often an enabler for other types of proximity</li><li>Can more specifically facilitate the development of social proximity through face-to-face interactions</li></ul></td></tr><tr><td>Cognitive</td><td>Shared knowledge bases and expertise allowing actors to communicate, understand and process new knowledge (Boschma, 2005)</td><td><ul><li>Too little cognitive proximity hampers understanding</li><li>Too much cognitive proximity may be detrimental to learning and innovation</li></ul></td><td><ul><li>Can develop without geographic proximity</li><li>Strengthened by social and organizational proximity</li></ul></td></tr><tr><td>Social</td><td>Trust-based relationships embedded in social networks (Boschma, 2005)</td><td><ul><li>Based on trust and experience</li><li>Facilitates tacit knowledge exchange</li></ul></td><td><ul><li>Can substitute for geographic proximity</li><li>Can foster cognitive proximity</li><li>Complements organizational proximity</li></ul></td></tr><tr><td>Organizational</td><td>Shared relational and knowledge spaces enabling interaction and coordination within organizational structures (Boschma, 2005)</td><td><ul><li>Enables coordination</li><li>Too much can lead to a lack of flexibility</li></ul></td><td><ul><li>Can develop without geographic proximity</li><li>Interacts with institutional proximity</li><li>Provides a framework for cognitive proximity and potentially social proximity</li></ul></td></tr><tr><td>Institutional</td><td>Shared formal and informal rules (Zimmermann et al., 2022)</td><td><ul><li>Provides stable conditions</li><li>Can become a constraint due to rigid regulations or institutional inertia</li></ul></td><td><ul><li>Provides a framework for other proximities</li><li>Interacts with social and organizational proximity</li></ul></td></tr></tbody></table>

Source: author's own elaboration based on Boschma (2005), Torre and Rallet (2005), Carrincazeaux et al. (2008), Ben Latifa and Rabeau (2013), Yamamura and Lassalle (2020), Sternberg (2022) and Zimmermann et al. (2022).
correlate with geographic proximity, their relationships can be either complementary—where one reinforces another—or substitutive, where one compensates for the absence of another (Yamamura and Lassalle, 2020). Boschma (2005) underscores that geographic proximity “should always be examined in relation to other dimensions of proximity that may provide alternative solutions to the problem of coordination” (p. 61). For instance, shared cognitive frameworks can bridge spatial distance, while strong institutional structures may mitigate the risks associated with organizational gaps.

Finally, proximity theory highlights the importance of achieving optimal levels of proximity as both excessive and insufficient proximity can hinder collaboration and innovation. Excessive proximity risks hindering creativity and fostering rigid groupthink, while insufficient proximity can lead to miscommunication and weak ties, reducing the effectiveness of interactions (Boschma, 2005). This balance underscores the nuanced role of proximity in enabling the success and resilience of a system composed of multiple actors.

## 3.2. The role of proximity in EEs

The proximity framework therefore provides valuable insights into how different forms of proximity can contribute to EEs' success (Yamamura and Lassalle, 2020). Table 2 outlines how each proximity dimension manifests in EEs, highlighting their benefits and risks. It also provides insights into how EE actors can leverage proximities to ensure effective functioning and success.

The development of EEs relies on the mobilization of resources and the interactions that allow these resources to evolve and be optimally exploited (Shi and Shi, 2022). Geographic proximity plays a crucial role in this process by fostering spontaneous interactions and facilitating the exchange of resources through face-to-face communication, a cornerstone of ecosystem dynamics. However, an over-reliance on local resources can lead to regional lock-in, where innovation stagnates due to insularity and inertia (Boschma, 2005; Balland et al., 2014). To sustain dynamism, actors in EEs can strategically balance local engagement with external connections. Indeed, Roundy et al. (2017) argue that EE resilience relies on balancing diversity and coherence among its components. EE actors can leverage geographic proximity through temporary co-location events and in-person interactions while complementing these with virtual collaboration to maximize the benefits of proximity without being constrained by its limitations. This hybrid approach enhances resource mobilization and knowledge diffusion, ensuring that EEs remain open and resilient.

Cognitive proximity enhances collaboration by promoting effective communication and shared understanding between actors (Torre and Rallet, 2005). It is particularly crucial in EEs, where entrepreneurs' ability to effectively mobilize and develop resources depends, among other factors, on their embeddedness within a community. This embeddedness is made possible by each entrepreneur's EE mindset (Roundy, 2024) and by their ability to understand one another. Ultimately, cognitive proximity—through shared interpretative frameworks and common languages—enables entrepreneurs to fully benefit from and contribute to their ecosystem. Yet, excessive alignment can foster groupthink, curbing creativity and limiting innovation potential (Boschma, 2005). To mitigate this, EE actors should emphasize knowledge-sharing platforms and initiatives that encourage cross-boundary learning, incorporating diverse perspectives to stimulate novel ideas (Muldoon et al., 2023). Indeed, several studies highlight practices, such as joint events and workshops, designed to align the mental models of EE stakeholders. For instance, Santos et al. (2025) note that orchestrators organize these gatherings to “reinforce complementary knowledge” (p. 13) within an agricultural technology EE in Brazil.

Social proximity, grounded in trust-based relationships, is essential for tacit knowledge exchange and effective collaboration (Sternberg, 2022). As previously mentioned, embeddedness within a community is crucial for EE actors, as it fosters the development

<table><caption>**Table 2**
Proximity dimensions in EEs: benefits, risks and actors' leverage mechanisms.</caption><thead><tr><td>Dimension</td><td>Benefits for EEs</td><td>Risks for EEs</td><td>Actors' mechanisms to leverage proximity in EE</td></tr></thead><tbody><tr><td>Geographic</td><td><ul><li>Facilitates face-to-face interaction and networking</li><li>Enables resource exchange</li></ul></td><td><ul><li>Risk of regional lock-in</li><li>Over-dependence on local interactions</li></ul></td><td><ul><li>Strategic use of physical meetings</li><li>Combination of physical and virtual meetings to balance diversity and coherence</li></ul></td></tr><tr><td>Cognitive</td><td><ul><li>Enables effective communication and understanding</li><li>Fosters knowledge transfer</li><li>Facilitates embeddedness in a community</li></ul></td><td><ul><li>Cognitive lock-in</li><li>Groupthink, reduced diversity of ideas</li></ul></td><td><ul><li>Joint training for shared understanding</li><li>Knowledge sharing platforms</li><li>Joint events and workshops to foster common languages</li></ul></td></tr><tr><td>Social</td><td><ul><li>Facilitates trust-based collaboration</li><li>Enables tacit knowledge sharing</li><li>Enhances access to opportunities</li></ul></td><td><ul><li>Over-embeddedness</li><li>Lock-in effects in social relationships</li></ul></td><td><ul><li>Informal events to facilitate unplanned encounters</li><li>Community management and network orchestration to ensure cohesion and openness</li></ul></td></tr><tr><td>Organizational</td><td><ul><li>Enables coordination</li><li>Facilitates resource sharing</li><li>Fosters a sense of belonging and engagement</li></ul></td><td><ul><li>Bureaucratic rigidity</li><li>Reduced flexibility</li></ul></td><td><ul><li>Formal and informal coordination mechanisms</li><li>Network decentralization to maintain flexibility and openness</li></ul></td></tr><tr><td>Institutional</td><td><ul><li>Provides stability and trust for interaction</li><li>Reduces uncertainty</li><li>Facilitates cross-regional or international interactions</li></ul></td><td><ul><li>Path dependency</li><li>Institutional rigidity</li></ul></td><td><ul><li>Adaptive rule setting and norm management</li></ul></td></tr></tbody></table>

Sources: author's own elaboration based on Boschma (2005), Torre and Rallet (2005), Ben Latifa and Rabaud (2013), Balland et al. (2014), Roundy et al. (2017), Theodoraki et al. (2018), Yamamura and Lassalle (2020), Cobben et al. (2022), Zimmermann et al. (2022), Muldoon et al. (2023), Harima et al. (2024), Roundy (2024), Tsukanova et al. (2024), Santos et al. (2025).
and mobilization of resources through shared experiences and mutual support. Social proximity benefits EE participants by facilitating access to mentorship, investment opportunities, and partnerships (Theodoraki and Messeghem, 2017), ultimately strengthening their ability to navigate uncertainties and seize new opportunities. However, over-embeddedness can lead to the formation of exclusive networks that limit unplanned encounters and the inclusion of newcomers, hindering EEs' dynamism. To enhance their embeddedness, actors can participate in informal activities, such as networking events, sometimes organized by EE orchestrators. For instance, Harima et al. (2024) describe such informal get-togethers within the EE of Santiago de Chile. These initiatives help strike a balance between cohesion and openness, ensuring that social proximity remains an enabler rather than a constraint.

Organizational proximity ensures structured coordination, fostering efficiency and clarity among actors (Boschma, 2005). EEs exhibit diverse organizational forms, emerging through either top-down governance or bottom-up entrepreneurial initiatives (Colombo et al., 2019), often following non-linear evolutionary paths (Cho et al., 2022). Some EEs rely on orchestrators to structure interactions (Santos et al., 2023, 2025; Harima et al., 2024), while others function without central coordination. Regardless of the model, organizational arrangements must foster proximity by ensuring that actors, particularly entrepreneurs, recognize their belonging to the EE and, thus, engage with it. Roundy (2024) conceptualizes this awareness as “entitativity”, the perception that an EE forms a cohesive and interconnected entity. Such a mindset is essential for coordination and, ultimately, for the ecosystem’s development and resilience. However, excessive organizational closeness can lead to bureaucratic rigidity, reducing adaptability (Yamamura and Lassalle, 2020). To balance these dynamics, EE actors should establish formal and informal coordination mechanisms while maintaining flexibility to foster innovation and responsiveness to change (Scott et al., 2022).

Institutional proximity provides stability through shared norms, rules, and standards, which reduce uncertainty and foster trust (Boschma, 2005; Zimmermann et al., 2022). A common and supportive institutional framework is essential for enabling resource circulation and facilitating interactions among actors (Cao and Shi, 2021). Institutional proximity, through aligned regulatory environments, policies, and cultural structures for actors, fosters cooperation and coordination, thereby enhancing the functioning of the EE. Furthermore, it plays a key role in connecting cities and regions that share institutional similarities, thereby extending interactions beyond geographically restricted spaces. This expanded reach allows entrepreneurial communities to access broader networks, resources, and markets. For instance, the Estonian EE benefits from an institutional framework highly conducive to innovation and digitalization (Marquardt and Harima, 2024). Not only does this supportive environment foster the growth of a dynamic local entrepreneurial community, but it also enables the integration of foreign entrepreneurs into the ecosystem, reinforcing its global connectivity. However, rigid adherence to established norms can create path dependency, hindering innovation and evolution. To maintain dynamism, actors must advocate for adaptive governance frameworks that balance continuity with flexibility, ensuring that rule-setting and norm management evolve alongside the ecosystem’s changing needs.

By understanding the interplay and dynamics of these proximity dimensions, actors in EEs can adopt strategies and attitudes that enhance interactions and coordination while mitigating risks. This multidimensional approach positions proximity as a powerful enabler of EEs' success rather than a constraint. Interestingly, Santos et al. (2025) highlight the crucial role of proximity dimensions in fostering coherence among EE orchestrators and contributing to the overall “health” of EEs. Our work complements this finding as we argue that these forms of proximity influence interactions not only between orchestrators but also between all EE actors. This perspective offers three key insights for EE actors (including orchestrators) and researchers. First, it emphasizes that effective EE functioning arises from the interplay of multiple proximity dimensions, and not reliance on any single form. Second, it underscores the importance of achieving optimal levels of proximity, as excessive or insufficient proximity can hinder ecosystem performance. Finally, it provides a framework for exploring how digital transformation is reshaping EEs.

<table><caption>**Table 3**
Digital transformation of proximity dimensions in EEs.</caption><thead><tr><td>Dimension</td><td>Evolution with digitalization</td></tr></thead><tbody><tr><td>Geographic</td><td><ul><li>Reduced importance for daily interactions</li><li>Strategic combination of online tools for routine interactions and face-to-face meetings for trust-building (temporary geographic proximity)</li><li>Easier access to external resources (outside the region or the country)</li><li>Digitalization remains embedded in specific places, relying on localized infrastructures and skills.</li></ul></td></tr><tr><td>Cognitive</td><td><ul><li>Online knowledge sharing and learning</li><li>Virtual communities of practice enabling knowledge exchange</li><li>Access to distant knowledge sources</li><li>Risk of fragmentation</li><li>Need to balance cognitive cohesion with openness</li></ul></td></tr><tr><td>Social</td><td><ul><li>Online communities for networking</li><li>New challenges in building trust online and maintaining inclusivity</li><li>Reduced likelihood of spontaneous interactions and integration of newcomers</li></ul></td></tr><tr><td>Organizational</td><td><ul><li>Digital coordination tools</li><li>Platform-based organizations</li><li>Remote collaboration capabilities</li><li>Weakened cohesion</li></ul></td></tr><tr><td>Institutional</td><td><ul><li>Regulatory challenges and adaptation needs</li><li>Need for institutional alignment and coherence</li></ul></td></tr></tbody></table>

Sources: author's own elaboration based on Susan and Acs (2017), Autio et al. (2018), Cao and Shi (2021), Schildt (2022), Sternberg (2022), Muldoon et al. (2023), Audretsch et al. (2024), Marquardt and Harima (2024), Tsukanova et al. (2024).
## 4. Digital transformation of proximity in EEs

Digital transformation is reshaping the role of proximity within EEs, altering traditional mechanisms of interaction while fostering innovative forms of collaboration. Rather than diminishing the significance of proximity dimensions, digital tools are transforming how these proximities function. For instance, these tools enable access to resources beyond immediate geographic proximity (Marquardt and Harima, 2024). They also facilitate coordination, which remains strongly dependent on various forms of proximity (Bernała et al., 2022). To remain resilient, EEs must therefore increasingly balance virtual and physical interactions, adopting new approaches to building and sustaining relationships. These transformations are summarized in Table 3.

In the digital age, geographic proximity remains crucial for initial trust-building and complex negotiations but plays a smaller role in routine interactions. Digital platforms enable unbounded EEs by facilitating collaboration across distances (Audretsch et al., 2024), combining online tools for daily coordination with physical meetings to strengthen trust and address complex issues (Tsukanova et al., 2024). Moreover, digitalization grants access to resources beyond an EE's geographic boundaries, a phenomenon Marquardt and Harima (2024) term "digital boundary spanning". This reduces the relevance of spatial constraints, allowing EEs to tap into international talent, capital, and expertise. Based on the Estonian EE, the authors show how digitalization fosters global network integration, particularly in early development phases, enhancing entrepreneurial capabilities and knowledge spillovers. However, it is important to note that digitalization is not an aspatial concept. As Sternberg (2022) argues, digital entrepreneurship remains embedded in specific places, relying on both physical infrastructure and localized digital skills. Ultimately, digitalization reconfigures rather than diminishes the role of geographic proximity in EEs.

Digitalization reshapes cognitive proximity within EEs by altering how knowledge is shared and interpreted. While traditional cognitive proximity relies on in-person interactions, digital tools expand access to diverse knowledge networks, enabling entrepreneurs to engage with broader communities beyond their immediate environment (Marquardt and Harima, 2024). Cognitive proximity evolves through online knowledge sharing and access to distant knowledge sources (Audretsch et al., 2024). Virtual collaboration platforms facilitate continuous knowledge exchange, fostering shared understanding despite geographic dispersion. However, digitalization can also fragment cognitive proximity by increasing exposure to diverse perspectives, which may hinder the development of a common interpretative framework. Additionally, the lack of informal, spontaneous interactions in digital spaces can slow mutual comprehension (Muldoon et al., 2023). To counterbalance these effects, EE actors should implement hybrid strategies combining digital knowledge-sharing initiatives with in-person interactions to reinforce cognitive alignment while maintaining openness to diverse viewpoints. This approach ensures that digitalization enhances, rather than disrupts, the cognitive cohesion necessary for effective EE functioning.

Digitalization transforms social proximity within EEs by expanding interactions while altering trust-building dynamics. Social proximity, essential for knowledge exchange and collaboration (Sternberg, 2022), traditionally relies on in-person interactions such as networking events (Harima et al., 2024; Santos et al., 2025). Online communities and virtual networking now enhance connectivity beyond geographic boundaries, though building trust remotely presents challenges (Muldoon et al., 2023). While digital tools facilitate broader access to mentors and investors, they may not fully replace face-to-face interactions. Online networks risk exclusivity, reducing the likelihood of spontaneous, unplanned encounters and limiting new interactions and newcomers' integration. To maintain openness, EEs should combine virtual and physical interactions, ensuring that digital connections complement rather than replace traditional social proximity.

Digitalization reconfigures organizational proximity by altering coordination dynamics in both top-down and bottom-up EEs. Traditionally, organizational proximity ensures structured interactions, fostering efficiency and coherence among actors (Boschma, 2005). In top-down ecosystems, digital coordination tools enhance orchestrators' ability to structure interactions remotely, enabling broader participation while maintaining control. Platform-based organization (Sussan and Acs, 2017) further facilitates streamlined collaboration, reducing the need for direct oversight. In contrast, bottom-up EEs, driven by entrepreneurial initiatives, leverage digital tools to foster decentralized yet interconnected networks, where actors self-organize and mobilize resources beyond geographic constraints. While digitalization enhances flexibility in both models, it also poses challenges—excessive reliance on virtual coordination may weaken cohesion and reduce the informal exchanges crucial for adaptability. To balance efficiency gains with ecosystem resilience, EEs can benefit from integrating digital tools with complementary offline mechanisms.

Digitalization is reshaping institutional proximity by introducing new governance challenges and regulatory adaptations. While aligned norms and policies facilitate interactions and coordination within EEs, digitalization often creates tensions between innovation and regulatory structures. Digitalization enables new forms of organizing while compelling traditional institutions to adjust their norms and governance frameworks to stay relevant in an increasingly hybrid physical-digital ecosystem (Schildt, 2022). For instance, data protection regulations like the EU data protection laws (e.g., GDPR) create complexities for startups operating across multiple jurisdictions, requiring them to navigate varying compliance standards. To foster effective interactions and coordination, institutions can adopt adaptive governance strategies that accommodate emerging digital business activities while maintaining coherence across regions. As shown in the Estonian EE, a digitally advanced institutional framework can foster both local entrepreneurship and global connectivity, enabling startups to access international markets and talent pools (Marquardt and Harima, 2024). Regulatory misalignment across regions may create barriers rather than facilitate cross-border entrepreneurial activities.

In sum, instead of eliminating spatial benefits and constraints, digitalization reshapes proximity, making it more fluid and multi-dimensional. Rather than merely shifting from physical to virtual interactions, successful and resilient EEs adopt hybrid models that strategically balance digital and physical proximity to enhance interactions and coordination (Tsukanova et al., 2024).
## 5. Conclusion and research avenues

This paper demonstrates that a proximity-based approach offers valuable insights for the reconceptualization of EEs. These insights are particularly timely as recent literature challenges the traditional view of EEs as geographically bounded systems, especially in an era where digitalization plays an increasing role in entrepreneurial activity. By bringing proximity theory to the forefront of EE analysis, we provide a more nuanced understanding of how different forms of proximity enable or constrain EE development and performance. Our analysis has three main theoretical implications. First, it suggests that EE boundaries should be conceptualized through multiple dimensions of proximity rather than solely through geographic boundaries. Second, it highlights how different forms of proximity interact and complement each other in enabling resource interactions and coordination within EEs. Third, it demonstrates how digital transformation not only creates new possibilities for leveraging proximity but also introduces new challenges.

This theoretical framework opens several promising avenues for future research. First, the tension between lock-in effects and openness in EEs requires deeper investigation. While proximity fosters interaction and coordination, excessive reliance on established networks can lead to rigidity and reduced adaptability (Boschma, 2005). Future research should explore how actors can mitigate lock-in by enabling new forms of interaction and access to external resources, notably through digital tools but not exclusively. Second, the relative importance of different forms of proximity for EE success remains an open question. Empirical studies should examine how actors (particularly orchestrators, where they exist) practically enhance proximity through governance mechanisms, digital platforms, and strategic network-building. Third, a more nuanced understanding of how proximity mechanisms affect different types of actors is needed. Small firms often rely more on geographic proximity, while larger firms leverage global networks (Torre, 2014). How these dynamics evolve in digitalized EEs remains unclear. Fourth, measuring proximity remains a methodological challenge. Developing innovative approaches, combining qualitative insights with quantitative analyses, will be essential to track proximity dynamics over time and assess their impact on EE performance (Balland et al., 2014). Addressing these research gaps will provide a more comprehensive understanding of the spatial and non-spatial dimensions shaping EEs in the digital era.

## Declaration of competing interest

The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.

## Acknowledgements

The author wishes to thank Associate Editor Philip T. Roundy and the anonymous reviewer for their constructive comments throughout the review process. The author also thanks Sébastien Bourdin for his valuable feedback on an earlier version of this manuscript.

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