Entrepreneurship ecosystem

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An entrepreneurial ecosystem or entrepreneurship ecosystems are peculiar systems of interdependent actors and relations directly or indirectly supporting the creation and growth of new ventures. [1] [2] [3]

Contents

The ecosystem metaphor

"Ecosystem" refers to the elements – individuals, organizations or institutions – outside the individual entrepreneur that are conducive to, or inhibitive of, the choice of a person to become an entrepreneur, or the probabilities of his or her success following launch. Organizations and individuals representing these elements are referred to as entrepreneurship stakeholders. Stakeholders are any entity that has an interest, actually or potentially, in there being more entrepreneurship in the region. Entrepreneurship stakeholders may include government, schools, universities, private sector, family businesses, investors, banks, entrepreneurs, social leaders, research centers, military, labor representatives, students, lawyers, cooperatives, communes, multinationals, private foundations, and international aid agencies.

In order to explain or create sustainable entrepreneurship, one isolated element in the ecosystem is rarely sufficient. In regions which have extensive amounts of entrepreneurship, including Silicon Valley, Boston, New York City, and Israel, [4] many of the ecosystem elements are strong and typically have evolved in tandem. Similarly, the formation of these ecosystems suggests that governments or societal leaders who want to foster more entrepreneurship as part of economic policy must strengthen several such elements simultaneously. However, recent research shows that government policy is often limited in what it can do to develop entrepreneurial ecosystems. [5]

In July 2010, the Harvard Business Review published an article by Daniel Isenberg, Professor of Entrepreneurship Practice at Babson College, entitled “How to Start an Entrepreneurial Revolution.” [6] In this article, Isenberg describes the environment in which entrepreneurship tends to thrive. Drawing from examples from around the world, the article proposes that entrepreneurs are most successful when they have access to the human, financial and professional resources they need, and operate in an environment in which government policies encourage and safeguard entrepreneurs. This network is described as the entrepreneurship ecosystem.

The Babson College Entrepreneurship Ecosystem Project then categorizes this framework into these domains: policy, finance, culture, supports, human capital and markets. Much additional scholarship has reinforced this conceptualization, and Liguori and colleagues developed a measure that has been widely used nationally to assess communities from Tampa to Philadelphia to Chicago, and more. [1] [7]

Several academic researchers have begun to investigate entrepreneurial ecosystems as well. Spigel [8] suggests that ecosystems require cultural attributes (a culture of entrepreneurship and histories of successful entrepreneurship), social attributes that are accessed through social ties (worker talent, investment capital, social networks, and entrepreneurial mentors) and material attributes grounded in a specific places (government policies, universities, support services, physical infrastructure, and open local markets). Stam [9] distinguishes between framework conditions of ecosystems (formal institutions, culture, physical infrastructure, and market demand) with systematic conditions of networks, leadership, finance, talent, knowledge, and support services.

Emerging entrepreneurial ecosystems (EEEs) are often evaluated using tangible metrics like new products, patents, and venture capital funding. However, Hannigan et al. (2022) [10] argue that understanding these ecosystems requires considering cultural factors alongside material ones. They emphasize that cultural elements, such as community engagement and shared values, play a crucial role in the growth and success of EEEs. By incorporating both cultural and material perspectives, policymakers can better design incentives and regulations to foster economic growth and innovation in these ecosystems. This approach suggests that building cultural infrastructure is as important as financial and technical support in developing thriving entrepreneurial environments.

There are several key conditions that typically define a healthy ecosystem. The ecosystem:

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Startup ecosystem – following the financial downturn of 2008 and the long-lasting slow growth period, there have been increasing focus towards fostering more startup company creation around the world to further target regional support efforts towards those type of companies that have higher innovation, growth and job creation potential. This has also led to an increasing focus on startup ecosystem development.

University-based entrepreneurship ecosystem – Entrepreneurship thrives in ecosystems in which multiple stakeholders play key roles. Academic institutions are central in shaping young people’s attitudes, skills and behaviours. However, actors outside of the education systems play an increasingly critical role in working with formal and informal educational programmes as well as reaching out to underserved and socially excluded targets groups. This requires collaboration and multistakeholder partnerships. Entrepreneurship ecosystems commonly refer to academic programs within a university that focus on the development of student/graduate entrepreneurs and/or the commercialization of technology or intellectual property developed at the university level. [11] [12] However before the entrepreneurial ecosystem can bloom, the education system must embrace the idea that entrepreneurship is a core element of higher education.

Also, entrepreneurship is usually perceived as the cure-all solution for deprivation depletion. Advocates assert that it guides to job design, higher earnings, and lower deprivation prices in the towns within it happens. Others disagree that numerous entrepreneurs are generating low-capacity companies helping regional markets. [13]

Business cluster – A business cluster is a geographic concentration of interconnected businesses, suppliers, and associated institutions in a particular field. Early research was done in this context by Benjamin Chinitz in 1961. Chinitz posed several theories, but most importantly noticed a correlation between average firm size and average growth rates within regions. [14] In addition, Glaeser, Kerr and Ponzetto followed up this research and confirmed the relationship between smaller average firm size and higher growth rates. [15] Chatterji, Glaeser and Kerr also noted that some of the most famous entrepreneurial clusters (Silicon Valley, Boston's Route 128 Corridor, and Research Triangle Park) were located near large research universities. [16] Governments often look to clusters to stimulate innovation and entrepreneurship in their region. When clusters are applied to entrepreneurship, experts agree governments should not seek to create new clusters, but rather reinforce existing ones. [17] Tony Hsieh, founder of Zappos, has begun a project to see if an entrepreneurial cluster can be created in Las Vegas. [18]

See also

Related Research Articles

A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model. While entrepreneurship includes all new businesses including self-employment and businesses that do not intend to go public, startups are new businesses that intend to grow large beyond the solo-founder. During the beginning, startups face high uncertainty and have high rates of failure, but a minority of them do go on to become successful and influential, such as unicorns.

A business incubator is an organization that helps startup companies and individual entrepreneurs to develop their businesses by providing a fullscale range of services, starting with management training and office space, and ending with venture capital financing. The National Business Incubation Association (NBIA) defines business incubators as a catalyst tool for either regional or national economic development. NBIA categorizes its members' incubators by the following five incubator types: academic institutions; non-profit development corporations; for-profit property development ventures; venture capital firms, and a combination of the above.

<span class="mw-page-title-main">Social entrepreneurship</span> Approach to develop, fund and implement solutions to social or environmental issues

Social entrepreneurship is an approach by individuals, groups, start-up companies or entrepreneurs, in which they develop, fund and implement solutions to social, cultural, or environmental issues. This concept may be applied to a wide range of organizations, which vary in size, aims, and beliefs. For-profit entrepreneurs typically measure performance using business metrics like profit, revenues and increases in stock prices. Social entrepreneurs, however, are either non-profits, or they blend for-profit goals with generating a positive "return to society". Therefore, they use different metrics. Social entrepreneurship typically attempts to further broad social, cultural and environmental goals often associated with the voluntary sector in areas such as poverty alleviation, health care and community development.

Open innovation is a term used to promote an Information Age mindset toward innovation that runs counter to the secrecy and silo mentality of traditional corporate research labs. The benefits and driving forces behind increased openness have been noted and discussed as far back as the 1960s, especially as it pertains to interfirm cooperation in R&D. Use of the term 'open innovation' in reference to the increasing embrace of external cooperation in a complex world has been promoted in particular by Henry Chesbrough, adjunct professor and faculty director of the Center for Open Innovation of the Haas School of Business at the University of California, and Maire Tecnimont Chair of Open Innovation at Luiss.

Entrepreneurship education sets to provide students with the knowledge, skills and motivation to encourage entrepreneurial success in a variety of settings.

An angel investor is an individual who provides capital to a business or businesses, including startups, usually in exchange for convertible debt or ownership equity. Angel investors often provide support to startups at a very early stage, once or in a consecutive manner, and when most investors are not prepared to back them. In a survey of 150 founders conducted by Wilbur Labs, about 70% of entrepreneurs will face potential business failure, and nearly 66% will face this potential failure within 25 months of launching their company. A small but increasing number of angel investors invest online through equity crowdfunding or organize themselves into angel groups or angel networks to share investment capital and provide advice to their portfolio companies. The number of angel investors has greatly increased since the mid-20th century.

<span class="mw-page-title-main">Entrepreneurship</span> Taking financial risks in the hope of profit

Entrepreneurship is the creation or extraction of economic value in ways that generally entail beyond the minimal amount of risk, and potentially involving values besides simply economic ones.

<span class="mw-page-title-main">Karen Mills</span> US businesswoman and administrator

Karen Gordon Mills is an American businessperson and former government official who served as the 23rd Administrator of the U.S. Small Business Administration (SBA). She was nominated by President-elect Barack Obama on December 19, 2008, confirmed unanimously by the Senate on April 2, 2009, and sworn in on April 6, 2009. During her tenure, her office was elevated to the rank of Cabinet-level officer, expanding her power on policy decisions and granting her inclusion in the President's cabinet meetings. On February 11, 2013, she announced her resignation as Administrator and left the post on September 1, 2013.

<span class="mw-page-title-main">Centre for Cellular and Molecular Platforms</span>

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Vincent Mangematin is a French researcher and professor in management, specialized in Strategy, Strategic management of Innovation and Technology Management. He is currently professor and scientific director at Grenoble Ecole de Management.

<span class="mw-page-title-main">Startup ecosystem</span> Type of business ecosystem

A startup ecosystem is formed by people in startups in their various stages, and various types of organizations in a location that are interacting as a system to create and scale new startup companies. These organizations can be further divided into categories such as universities, funding organizations, support organizations, research organizations, service provider organizations and large corporations. Local Governments and Government organizations such as Commerce / Industry / Economic Development departments also play an important role in a startup ecosystem. Different organizations typically focus on specific parts of the ecosystem function and startups at their specific development stage(s).

Innovation districts are urban geographies of innovation where R&D strong institutions, companies, and other private actors develop integrated strategies and solutions to develop thriving innovation ecosystems–areas that attract entrepreneurs, startups, and business incubators. Unlike science parks, innovation districts are physically compact, leverage density and high levels of accessibility, and provide a “mash up” of activities including housing, office, and neighborhood-serving amenities. Districts signify the collapse back of innovation into cities and is increasingly used as a way to revitalize the economies of cities and their broader regions. As of 2019, there are more than 100 districts worldwide.

<span class="mw-page-title-main">Kerala Startup Mission</span>

Kerala Startup Mission (KSUM), formerly known as Technopark TBI, is a state-level agency under the Government of Kerala, India, dedicated to fostering entrepreneurship and incubation activities. Established primarily to manage the Technology Business Incubator (TBI), a startup accelerator, KSUM aims to cultivate a conducive environment for high-technology-based businesses.

William R. Kerr is the Dimitri V. D'Arbeloff – MBA Class of 1955 Professor of Business Administration professor at Harvard Business School, where he is a co-director of Harvard's Managing the Future of Work project and faculty chair of the Launching New Ventures program for executive education.

Clusters of Innovations (COI) have been defined in 2015 as "global economic hot spots where new technologies germinate at an astounding rate and where pools of capital, expertise, and talent foster the development of new industries and new ways of doing business."

The National Documentation Centre is a Greek public organisation that promotes knowledge, research, innovation and digital transformation. It was established in 1980 with funding from the United Nations Development Programme with the aim to strengthen the collection and distribution of research-related material, and to ensure full accessibility to it. It has been designated as a National Scientific Infrastructure, a National Authority of the Hellenic Statistical System, and National Contact Point for European Research and Innovation Programmes. Since August 2019, it has been established as a discrete public-interest legal entity under private law, and is supervised by the Ministry of Digital Governance. The management bodies of EKT are the Administrative Board and the Director who, since 2013, has been Dr. Evi Sachini.

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<span class="mw-page-title-main">Deepak Hegde</span> American Economist and professor of innovation, policy, and entrepreneurship

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References

  1. 1 2 Liguori, Eric; Bendickson, Josh; Solomon, Shelby; McDowell, William C. (2019-01-01). "Development of a multi-dimensional measure for assessing entrepreneurial ecosystems". Entrepreneurship & Regional Development. 31 (1–2): 7–21. doi:10.1080/08985626.2018.1537144. ISSN   0898-5626. S2CID   158253768.
  2. ↑ Cavallo et al., 2019 (2019). "Entrepreneurial ecosystem research: present debates and future directions". International Entrepreneurship and Management Journal. 15 (4): 1291–1321. doi:10.1007/s11365-018-0526-3. hdl: 11311/1087032 . S2CID   158759341.{{cite journal}}: CS1 maint: numeric names: authors list (link)
  3. ↑ Hannigan, Timothy R.; Briggs, Anthony R.; Valadao, Rodrigo; Seidel, Marc-David L.; Jennings, P. Devereaux (2022-11-01). "A new tool for policymakers: Mapping cultural possibilities in an emerging AI entrepreneurial ecosystem". Research Policy. Uncommon Methods and Metrics for Local Entrepreneurial Ecosystems. 51 (9): 104315. doi: 10.1016/j.respol.2021.104315 . ISSN   0048-7333.
  4. ↑ "The Start-up Nation Unveiled: Interviews with Israel's Leading Entrepreneurs". Startup Camel. Archived from the original on 20 February 2015. Retrieved 28 February 2015.
  5. ↑ "Entrepreneurship Ecosystems and Growth-Oriented Entrepreneurship", Report for the OECD LEED Programme, Paris; Mason, C. and Brown, R. 2014.
  6. ↑ "How to Start an Entrepreneurial Revolution" Harvard Business Review. Retrieved June 2010.
  7. ↑ Liguori, Eric; Bendickson, Joshua S. (2020-10-01). "Rising to the challenge: Entrepreneurship ecosystems and SDG success". Journal of the International Council for Small Business. 1 (3–4): 118–125. doi:10.1080/26437015.2020.1827900. ISSN   2643-7015. S2CID   228858931.
  8. ↑ Spigel (2017) The Relational Organization of Entrepreneurial Ecosystems. 41(1): 49-72 DOI: 10.1111/etap.12167
  9. ↑ Stam (2015) Entrepreneurial Ecosystems and Regional Policy: A Sympathetic Critique. European Planning Studies 23(9): 1759-1769. DOI: 10.1080/09654313.2015.1061484
  10. ↑ Hannigan, Timothy R.; Briggs, Anthony R.; Valadao, Rodrigo; Seidel, Marc-David L.; Jennings, P. Devereaux (2022-11-01). "A new tool for policymakers: Mapping cultural possibilities in an emerging AI entrepreneurial ecosystem". Research Policy. Uncommon Methods and Metrics for Local Entrepreneurial Ecosystems. 51 (9): 104315. doi: 10.1016/j.respol.2021.104315 . ISSN   0048-7333.
  11. ↑ "The Entrepreneurship Ecosystem," MIT Technology Review. Retrieved September 2005.
  12. ↑ ""Entrepreneurial Impact: The Role of MIT," Kauffman Foundation. Retrieved February 2009". Archived from the original on 2011-07-21. Retrieved 2011-04-29.
  13. ↑ Lee, Neil. "Entrepreneurship and the fight against poverty in US cities". Economy and Space: 1–22.
  14. ↑ Chinitz, Benjamin. “Contrasts in Agglomeration: New York and Pittsburgh.” The American Economic Review, Vol. 51, No. 2, Papers and Proceedings of the Seventy-Third Annual Meeting of the American Economic Association. (May, 1961): 279-289.
  15. ↑ Glaeser, Edward L, William R. Kerr, and Giacomo A.M. Ponzetto, ”Clusters of Entrepreneurship” (NBER Working Paper Series, National Bureau of Economic Research, Cambridge, MA, 2009).
  16. ↑ Chatterji, Aaron, Edward Glaeser, and William Kerr. "Clusters of Entrepreneurship and Innovation." NBER Innovation Policy & the Economy (University of Chicago Press) 14, no. 1 (2014): 129-66.
  17. ↑ "Clusters and the New Economics of Competition," Harvard Business Review. Retrieved 1 November, 1998.
  18. ↑ Metz, Rachel. “Zappos CEO Bets $350 Million on a Las Vegas Startup Scene” MIT Technology Review. July 17, 2013. http://www.technologyreview.com/news/516526/zappos-ceo-bets-350-million-on-a-las-vegas-startup-scene/.


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