During a period of great challenges, when technological advancement and sustainability have become the greatest priorities, innovation ecosystems offer important insights, particularly when grounded in the smart cities context. Ecosystems’ dimensions––such as economic environment, institutional quality, knowledge, and infrastructure––help fuel both innovative and sustainable entrepreneurship. However, to a different extent, innovative entrepreneurship complements sustainable entrepreneurship by creating supporting conditions, whereas sustainable entrepreneurship tends to substitute for innovative entrepreneurship by developing competing market solutions. Using a panel dataset based on 30 smart cities over a 13-year period (2011–2023), we examined the complex interplay between these entrepreneurial approaches. Our findings reveal existing dynamics within innovation ecosystems, offering actionable insights for policymakers and practitioners. Specifically, we emphasize the need to design ecosystems that effectively balance the dual imperatives of innovation and sustainability, enabling development of resilient, future-oriented urban environments within the broader context of innovation ecosystems in smart cities.
