This research analyzes the impact of technology and technology-related startups operating within rapidly expanding, state-sponsored entrepreneurial ecosystems. While venture capabilities are often viewed as drivers of growth, little is known about how these capabilities are activated, validated and translated into scalable outcomes in contexts of strong state involvement and institutional transition. Using Saudi Arabia as the empirical setting, the study investigates how venture capabilities and ecosystem conditions interact to shape various scaling pathways.
The study draws on in-depth, semi-structured interviews with founders and senior executives from 26 Saudi technology and tech-enabled ventures. Using a Gioia-informed inductive approach, we developed a process-oriented analysis that links informant-voiced concepts to second-order themes and aggregate dimensions. Following an iterative review of the observed data structure, we propose a dynamic explanation of scaling pathways that are shaped by ecosystem conditioning mechanisms.
The findings show that scaling is a negotiated and path-dependent process rather than a direct outcome of ventures' capability. Thus, government support, accelerators, public procurement and ecosystem recognition can accelerate early growth, but they may also distort real signals by making supported milestones appear similar to sustainable market validation. The findings also reveal a capability-outcome decoupling phenomenon, where ventures strengthen internal financial, operational, product and talent capabilities but struggle to convert them into sustained scaling because of procurement bottlenecks, conservative investment behavior, market-readiness gaps and talent constraints.
The study contributes to scaling research by proposing that scaling is a process of capability conversion, conditioned by the ecosystem. Furthermore, it extends resource-based and entrepreneurial ecosystem perspectives by showing how state-led ecosystem architectures shape the timing, credibility and validation of venture capabilities in emerging and policy-driven contexts.
