Knowledge spillovers are widely recognized as a critical driver of innovation and entrepreneurial activity; however, their role in shaping entrepreneurial ecosystems remains underexplored. This gap is particularly pronounced in service industries and developing economies where existing models have largely overlooked knowledge spillovers as a constitutive element. Given that prevailing research is predominantly anchored in technology-intensive and manufacturing sectors, this study examines the fitness industry as a dynamic and multifaceted service sector as an illuminating case. Using semi-structured interviews and the Gioia Methodology for analysis, the findings reveal that spillovers, particularly those emanating from industry leaders, serve as a catalytic force, spurring entrepreneurial activities. Findings demonstrate that industry leaders act as central institutional intermediaries, acquiring and exploiting external knowledge, establishing legitimacy through first-mover advantage, and diffusing tacit and codified expertise across the sector. These mechanisms enabled distinct entrepreneurial activities including the emergence of industry followers and spin-offs, employee mobility and entrepreneurship, hobbyist/consumer-driven entrepreneurs and the creation of a capable industry workforce. With a lack of institutional support, educational liaison and policies, this circular relationship is particularly evident in the service industries of emerging economies, where tacit and experiential knowledge dominate and the entrepreneurial ecosystems continuously evolve by both absorbing and producing new knowledge. The research underscores that entrepreneurship is seldom an isolated phenomenon; it engages and influences a network of agents through social, cultural and bureaucratic channels. Here, the catalytic role of industry leader causes a butterfly effect, sending a ripple through the industry by disruption and standard elevation, such that, these interactions foster a nascent yet resilient, self-sustaining ecosystem in emerging economies.
Ahmad et al. (Tue,) studied this question.