INSTITUTIONAL DYNAMICS AND DIGITAL TRANSFORMATION: A MULTI-LEVEL CONCEPTUAL FRAMEWORK FOR INNOVATION-DRIVEN STARTUP ECOSYSTEMS IN VIETNAM

Abstract

This paper develops a multi-level conceptual framework to explain how the dynamic interaction of formal and informal institutions shapes innovation-driven startup ecosystems in emerging markets, with particular application to Vietnam's rapidly evolving entrepreneurial landscape. By synthesizing policy, regulatory, and sandbox mechanisms with digital social trust, social capital, and entrepreneurial culture, the model moves beyond static formal–informal dichotomies to capture the causal complexity of contemporary entrepreneurial environments. The framework explicitly incorporates mediating variables (digital transformation, perception, and networking) and moderating factors (sector, region, and degree of internationalization). Thereby, specifying the conditions under which institutional configurations produce differential startup outcomes across lifecycle stages. Three interrelated research questions guide the inquiry, addressing direct institutional effects, mediating transmission mechanisms, and moderating boundary conditions, respectively. A set of nine testable hypotheses is generated, and the framework's explanatory reach is validated through three scenario-based thought experiments drawn from Vietnam's documented regional and sectoral heterogeneity. The study contributes an integrative theoretical architecture suitable for empirical testing via multilevel structural equation modeling or comparative case analysis and offers stage-differentiated policy implications for policymakers and ecosystem actors in digital-transition economies.