EXPLORING INNOVATION AND TRANSACTION CAPACITY IN THE NORTHERN RIO GRANDE DO SUL, BRAZIL

This study investigates the role of regional innovation ecosystems in enhancing startups' transaction capacity, specifically in the context of Northern Rio Grande do Sul, Brazil. Specifically, it explores the underlying processes employed to mitigate uncertainty, formalize agreements, and streamline negotiations among regional stakeholders. Adopting an exploratory-qualitative framework, the research draws on semi-structured interviews with founders from ten startups affiliated with two prominent regional innovation hubs. The findings reveal that while the ecosystem bolsters credibility and facilitates customer referrals, it faces challenges in fostering deep-seated connectivity, thereby limiting visibility into broader business opportunities. Furthermore, while the ecosystem nurtures a customer-centric orientation, its direct influence on deepening client relationships remains peripheral. By integrating transaction cost theory with innovation ecosystem literature through thematic content analysis, this study advances the theoretical understanding of how relational and institutional arrangements configure transactional dynamics. Theoretically, it extends the construct of transactional capacity to the ecosystem level, highlighting inherent asymmetries in how these environments mediate commercial interactions. Practically, the study offers strategic insights for ecosystem managers and policymakers, pinpointing coordination gaps and systemic hurdles that must be addressed to enhance stakeholder integration and economic development.