Co-Creating Institutions in Space: How Patient Capital and Entrepreneurial Action Shape New Markets

Abstract

This study examines how new institutions and markets can be created in deep-tech domains characterized by extreme uncertainty. We focus on the interaction between government venture capital (GVC), as an institutional instrument for implementing public patient capital, and entrepreneurs. While prior research has accumulated insights on the functions and institutional design of GVCs and on entrepreneurs' activities and decision-making processes separately, theoretical examination focusing on their interaction remains limited. In particular, it remains unclear how the underlying behavioral logics of each—predictive and planned causation as investor logic versus means-driven and improvisational effectuation as entrepreneur logic—can be effectively integrated in practice. To address this question, we conducted a theory-informed case study of the collaboration between Astroscale, a Japanese space startup, and the Innovation Network Corporation of Japan (INCJ), a GVC. Drawing on interviews, archival sources, and comparative surveys, the analysis identifies four mechanisms of interaction that enabled institutional co-creation such as strategic dialogue, staged financing with flexible evaluation, hybrid governance through public–private syndication, and narrative translation aligned with policy frameworks. These mechanisms transformed uncertainty into institutional meaning, advancing Astroscale from a technology venture into an institutional actor. The study contributes to entrepreneurship and innovation policy research by reframing patient capital as an active institutional translator and situating effectuation within broader processes of institutional emergence in frontier markets.

Keywords: Institutional Co-creation, Patient Capital, Government Venture Capital, Effectuation

DOI: 10.54941/ahfe1007381