This chapter examines the development of an entrepreneurial ecosystem and the knowledge transfer process involved, in the tourist municipality of Lagos, Portugal. Participatory action research is used to identify issues, antagonistic forces, and the system of governance which emerged in the creation of the entrepreneurial ecosystem. The different roles of both public and private actors were identified. Despite a deficit of entrepreneurial culture and social capital, the main results show that participatory action research encouraged knowledge transfer among political actors, entrepreneurs, and academics, leading to the implementation of the basic conditions for an entrepreneurial ecosystem dynamic.

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