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Entrepreneurial Ecosystems and Regional Policy: A Sympathetic Critique

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Regional policies for entrepreneurship are currently going through a transition from increasing the quantity of entrepreneurship to increasing the quality of entrepreneurship. The next step will be the transition from entrepreneurship policy towards policy for an entrepreneurial economy. The entrepreneurial ecosystem approach has been heralded as a new framework accommodating these transitions. This approach starts with the entrepreneurial actor, but emphasizes the context of productive entrepreneurship. Entrepreneurship is not only the output of the system, entrepreneurs are important players themselves in creating the ecosystem and keeping it healthy. This research briefing reviews the entrepreneurial ecosystem literature and its shortcomings, and provides a novel synthesis. The entrepreneurial ecosystem approach speaks directly to practitioners, but its causal depth and evidence base is rather limited. This article provides a novel synthesis including a causal scheme of how the framework and systemic conditions of the ecosystem lead to particular entrepreneurial activities as output of the ecosystem and new value creation as outcome of the ecosystem. In addition it provides a framework for analysing the interactions between the elements within the ecosystem. This offers a much more rigorous and relevant starting point for subsequent studies into entrepreneurial ecosystems and the regional policy implications of these.
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Entrepreneurial Ecosystems and
Regional Policy: A Sympathetic Critique
Erik Stama
a Faculty of Law, Economics and Governance, Utrecht University
School of Economics, Utrecht, The Netherlands
Published online: 08 Jul 2015.
To cite this article: Erik Stam (2015) Entrepreneurial Ecosystems and Regional
Policy: A Sympathetic Critique, European Planning Studies, 23:9, 1759-1769, DOI:
10.1080/09654313.2015.1061484
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Entrepreneurial Ecosystems and
Regional Policy: A Sympathetic Critique
ERIK STAM
Faculty of Law, Economics and Governance, Utrecht University School of Economics, Utrecht,
The Netherlands
(Received December 2014; accepted June 2015)
ABSTRACT Regional policies for entrepreneurship are currently going through a transition from
increasing the quantity of entrepreneurship to increasing the quality of entrepreneurship. The
next step will be the transition from entrepreneurship policy towards policy for an
entrepreneurial economy. The entrepreneurial ecosystem approach has been heralded as a new
framework accommodating these transitions. This approach starts with the entrepreneurial actor,
but emphasizes the context of productive entrepreneurship. Entrepreneurship is not only the
output of the system, entrepreneurs are important players themselves in creating the ecosystem
and keeping it healthy. This research briefing reviews the entrepreneurial ecosystem literature
and its shortcomings, and provides a novel synthesis. The entrepreneurial ecosystem approach
speaks directly to practitioners, but its causal depth and evidence base is rather limited. This
article provides a novel synthesis including a causal scheme of how the framework and systemic
conditions of the ecosystem lead to particular entrepreneurial activities as output of the
ecosystem and new value creation as outcome of the ecosystem. In addition it provides a
framework for analysing the interactions between the elements within the ecosystem. This offers a
much more rigorous and relevant starting point for subsequent studies into entrepreneurial
ecosystems and the regional policy implications of these.
Keywords: entrepreneurial ecosystems; entrepreneurship; regional policy; economic policy
1. Introduction
Since the path-breaking work by Birch (1979,1987), many regional policies have been
aimed at increasing the prevalence of new and small firms (see e.g. Fischer & Nijkamp,
1988; Sternberg, 2012). However, recent empirical work has shown that it is not new or
small firms per se, but especially a rather narrow group of ambitious entrepreneurs that
is important for economic growth (Wong et al.,2005; Stam et al.,2009,2011). Ambitious
entrepreneurs are individuals exploring opportunities to discover and evaluate new goods
Correspondence Address: Erik Stam, Faculty of Law, Economics and Governance, Utrecht University School of
Economics, Kriekenpitplein 21-22, PO Box 80125, Utrecht, 3508 TC, The Netherlands. Email: e.stam@uu.nl
European Planning Studies, 2015
Vol. 23, No. 9, 1759 –1769, http://dx.doi.org/10.1080/09654313.2015.1061484
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and services and exploit them in order to add as much value as possible (Stam et al.,2012).
That means more than just “being your own boss” or “pursuing self-fulfilment” through
one’s own business. Ambitious entrepreneurs are entrepreneurs who attach importance
to performing (more than) well with their business (Stam et al.,2012). In practice, ambi-
tious entrepreneurs are more likely to achieve substantial firm growth, innovation or inter-
nationalization than the “average” entrepreneur. What does economic policy have to do
with this? Ambitious entrepreneurship can be interpreted as the basis of a Schumpeterian
variation on traditional welfare theory, where new value creation is at the centre (Schump-
eter, 1934). This recognition of the importance of ambitious entrepreneurship has trig-
gered a transition in policy attention from pushing up the quantity of entrepreneurship
(e.g. new firms and self-employment) to pushing up the quality of entrepreneurship
(e.g. growth and innovation-oriented entrepreneurship). This transition also necessitates
a shift in thinking about the rationales for policy. At the beginning of the twentieth
century, economists mainly looked at how the economic system affects value creation.
In this case, the word “system” refers to the way production, distribution and consumption
of goods and services are organized within society, which consists of people and insti-
tutions—including their relationship to the means of production. But gradually the econ-
omics perspective has been reduced to examining the extent to which markets function
optimally, in order to reach the maximum (allocative) efficiency. Or, in policy language:
is this a case of market failure? The textbook “rationales” for government intervention are
externalities, abuse of market power, public goods and asymmetric information.
Markets are an important mode of governance in economic systems. And in the context
of innovation and entrepreneurship, the failure of that mode of governance may also be a
reason for government intervention (see e.g. Jacobs & Theeuwes, 2005). This mode of
governance, however, also has substantial constraints for innovation and entrepreneurship
policies (Nooteboom & Stam, 2008). Market failure plays a role, but not everything in the
innovation system can be reduced to market contexts: the non-market interaction is seen
not only as market failure, but often also as a necessity for the realization of innovations
(Teece, 1992). For innovation and knowledge sharing in general, especially non-codified
knowledge, informal interaction is of great importance. Cooperation makes it possible to
exchange much more knowledge than can be specified contractually. This was the reason
to create a wider framework for this type of policies: the innovation system approach. The
focus of this approach is the so-called system failure: the lack of sufficient elements in the
innovation system (e.g. certain types of financing or knowledge), or a non-optimal inter-
action between these elements (e.g. between companies and knowledge institutes). An
innovation system works well if there is a sufficient variety of organizations that fulfil
the required functions in such an innovation system, and as a result create an optimal inter-
action between these elements. The innovation system approach examines organizations
and their interaction, and not only through market interaction, but also otherwise.
However, in the innovation system approach, the role of entrepreneurs remains a “black
box”, just like in the market failure approach, for that matter. This makes an alternative
view desirable. A new approach, called the entrepreneurial ecosystem approach,
appears to be able to solve the shortcomings of the market failure approach and the
system failure approach, and seems equally applicable to the policy of ambitious entrepre-
neurship. What this ecosystem approach includes and how it can be of importance for
(new) entrepreneurship policy are the subject of this article.
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2. The Entrepreneurial Ecosystem Approach
The entrepreneurial ecosystem approach has only occurred during the last five years.
There is not yet a widely shared definition. The first component of the term is “entrepre-
neurial” and refers to entrepreneurship, a process in which opportunities for creating new
goods and services are explored, evaluated and exploited (Shane & Venkataraman, 2000).
Generally formulated, entrepreneurship includes the process by which individuals exploit
opportunities for innovation (Schumpeter, 1934). The entrepreneurial ecosystem approach
often narrows this entrepreneurship down to “high-growth start-ups”, claiming that this
type of entrepreneurship is an important source of innovation, productivity growth and
employment (Mason & Brown, 2014; World Economic Forum, 2013). Empirically, this
claim seems too exclusive: innovative start-ups or entrepreneurial employees can also
be forms of productive entrepreneurship (Baumol, 1990) and in that way the source of
earlier mentioned welfare outcomes. But it is clear that the entrepreneurial ecosystem
approach does not by definition include the traditional statistical indicators of entrepre-
neurship, such as “self-employment” or “small businesses”, into entrepreneurship. This
distinction between the traditional measures of entrepreneurship and the conceptually
more adequate measures of entrepreneurship, such as innovative and growth-oriented
entrepreneurship, is increasingly emphasized in the entrepreneurship literature (Shane,
2009; Stam et al.,2012; Henrekson & Sanandaji, 2014).
The second component of the term is “ecosystem”. The biological interpretation of this
concept, in which the interaction of living organisms with their physical environment is at
the centre, is obviously not to be taken too literally within the context of entrepreneurial
ecosystems. The entrepreneurial ecosystem concept emphasizes that entrepreneurship
takes place in a community of interdependent actors. More particularly, the literature on
entrepreneurial ecosystems focuses on the role of the (social) context in allowing or
restricting entrepreneurship, and in that sense is closely connected to other recent
“systems of entrepreneurship” approaches (Sternberg, 2007; Ylinenpa
¨a
¨,2009; Acs
et al.,2014; Levie et al.,2014), which aim to bridge the innovation system approach
and entrepreneurship studies.
What the entrepreneurial ecosystem approach has in common with other established
concepts—such as clusters, industrial districts, innovation systems and learning
regions—is the focus on the external business environment. The approach differs from
these concepts by the fact that the entrepreneur, rather than the enterprise, is the focal
point. The entrepreneurial ecosystem approach thus begins with the entrepreneurial indi-
vidual instead of the company, but also emphasizes the role of the entrepreneurship
context.
Another significant distinction from other economic policy approaches is that the entre-
preneurial ecosystem approach not only sees entrepreneurship as a result of the system, but
also sees the importance of entrepreneurs as central players (leaders) in the creation of the
system and in keeping the system healthy. This “privatization” of entrepreneurship policy
decreases the role of government compared to previous policy approaches—which does
not alter the fact that this role maintains its importance, but rather as a “feeder” of the eco-
system than as a “leader” (Feld, 2012). Entrepreneurs with a long-term commitment to the
ecosystem are often best positioned to recognize the opportunities and restrictions of the
ecosystem, and to deal with them, together with the “feeders” of the ecosystem (such as
professional service providers and the financial infrastructure). The government can
Entrepreneurial Ecosystems and Regional Policy 1761
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play an important role as a “feeder”, for example in adjusting laws and regulations. Market
failures and system failures are not necessarily rationales for government intervention:
even here, entrepreneurs can find opportunities, for example by lifting information asym-
metry and organizing collective action to create public goods.
The recent popular literature on entrepreneurial ecosystems is directly aimed at the key
stakeholders of the ecosystem, mainly entrepreneurial leaders and policy-makers, and not
so much at an academic audience. It speaks directly to practitioners, but its causal depth
and evidence base is rather limited. The recent entrepreneurial ecosystem literature pro-
vides several lists of factors which are deemed to be important for the success of an entre-
preneurial ecosystem. Naturally, entrepreneurs (being visible and connected) are
considered to be the heart of a successful ecosystem, but successful entrepreneurial eco-
systems have nine attributes (Table 1).
Next to the key role of entrepreneurs themselves (in leading the development of the eco-
system and as mentors or advisors), the nine attributes by Feld (2012) emphasize the inter-
action between the players in the ecosystem (with high network density, many connecting
events and large companies collaborating with local start-ups) and access to all kinds of
relevant resources (talent, services and capital), with an enabling role of government at
the background.
Isenberg (2010) also discusses the concept of the entrepreneurial ecosystem. He notes
that there is no exact formula for the creation of such an ecosystem, but that (public)
Table 1. Nine attributes of a successful start-up community
Attribute Description
Leadership Strong group of entrepreneurs who are visible, accessible and committed to the
region being a great place to start and grow a company
Intermediaries Many well-respected mentors and advisors giving back across all stages, sectors,
demographics and geographies as well as a solid presence of effective, visible,
well-integrated accelerators and incubators
Network
density
Deep, well-connected community of start-ups and entrepreneurs along with
engaged and visible investors, advisors, mentors and supporters. Optimally,
these people and organizations cut across sectors, demographics and culture
engagement. Everyone must be willing to give back to his community
Government Strong government support for and understanding of start-ups to economic
growth. Additionally, supportive policies should be in place covering economic
development, tax and investment vehicles
Talent Broad, deep talent pool for all levels of employees in all sectors and areas of
expertise. Universities are an excellent resource for start-up talent and should
be well connected to community
Support
services
Professional services (legal, accounting, real estate, insurance and consulting) are
integrated, accessible, effective and appropriately priced
Engagement Large number of events for entrepreneurs and community to connect, with highly
visible and authentic participants (e.g. meet-ups, pitch days, start-up weekends,
boot camps, hackathons and competitions)
Companies Large companies that are the anchor of a city should create specific departments
and programmes to encourage cooperation with high-growth start-ups
Capital Strong, dense and supportive community of venture capitalists, angels, seed
investors and other forms of financing should be available, visible and
accessible across sectors, demographics and geography
Source: Feld (2012, pp. 186–187).
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leaders should follow nine principles when building an entrepreneurial ecosystem. These
principles emphasize the role of local conditions and bottom-up processes (1: Stop emu-
lating Silicon Valley; 2: Shape the ecosystem around local conditions; 3: Engage the
private sector from the start; 4: Stress the roots of new ventures; 5: Do not over-engineer
clusters; help them grow organically), emphasize ambitious entrepreneurship (6: Favour
the high potentials; 7: Get a big win on the board) and institutions (8: Tackle cultural
change head-on; 9: Reform legal, bureaucratic and regulatory frameworks). These prin-
ciples are claimed to lead to “venture creation”, the “creation of an ecosystem” and a
“vibrant business sector” (Isenberg, 2010). It is unclear how the causal mechanisms
work to realize these different results. Even though this might be a practitioner’s point
of view, the emphasis on the role of local conditions and bottom-up processes is largely
in line with recent academic work on regional innovation and growth (cf. Boschma &
Martin, 2010; Cooke et al.,2011), while the focus on ambitious entrepreneurship and insti-
tutions is also a key feature of recent academic entrepreneurship research (Henrekson &
Johansson, 2009;Stamet al.,2012).
Isenberg (2011) lists six distinct domains of the ecosystem: policy, finance, culture,
support, human capital and markets. This largely overlaps with the previously mentioned
attributes and the eight pillars in Table 2, as listed by the World Economic Forum (2013)
for a successful ecosystem, each with a number of components. These pillars also focus on
the presence of key factors (resources) such as human capital, finance and services; the
formal (“government & regulatory framework”) and informal institutions (“cultural
Table 2. Entrepreneurial ecosystem pillars and their components
Pillar Components
Accessible markets Domestic market: large/medium/small companies as customers and
governments as customer
Foreign market: large/medium/small companies as customers and
governments as customer
Human capital/workforce Management talent, technical talent, entrepreneurial company
experience, outsourcing availability and access to immigrant
workforce
Funding & finance Friends and family, angel investors, private equity, venture capital
and access to debt
Support systems/mentors Mentors/advisors, professional services, incubators/accelerators and
networks of entrepreneurial peers
Government & regulatory
framework
Ease of starting a business, tax incentives, business-friendly
legislation/policies, access to basic infrastructure, access to
telecommunications/broadband and access to transport
Education & training Available workforce with pre-university education, available
workforce with university education and those with
entrepreneurship-specific training
Major universities as
catalysts
Promoting a culture of respect for entrepreneurship, playing a key role
in idea-formation for new companies and playing a key role in
providing graduates to new companies
Cultural support Tolerance for risk and failure, preference for self-employment,
success stories/role models, research culture, positive image of
entrepreneurship and celebration of innovation
Source: World Economic Forum (2013, pp. 6–7).
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support”) enabling entrepreneurship and finally, access to customers in domestic and
foreign markets.
The listed attributes, principles and pillars show that the entrepreneurial ecosystem
approach contains a shift in traditional economic thinking about businesses, and especially
on markets and market failure, to a new economic view on people, networks and insti-
tutions. The common denominator appears to be the fact that entrepreneurs create new
value, organized by a wide variety of governance modes, enabled and confined within a
specific institutional context. This does not mean that companies and markets (and
market failure) are irrelevant. But markets and companies are governance modes which,
like all other forms of governance, will always be imperfect. Moreover, entrepreneurship
is often about companies and markets “in the making”, and not about situations that come
close to a “fully efficient market equilibrium”, as in the ideal of the market failure
approach.
3. Shortcomings of the Entrepreneurial Ecosystem Approach
The mere popularity of the entrepreneurial ecosystem approach is by no means a guarantee
of its profundity. Seductive though the entrepreneurial ecosystem concept is, there is much
about it that is problematic, and the rush to employ the entrepreneurial ecosystem
approach has run ahead of answering many fundamental conceptual, theoretical and
empirical questions. The phenomenon at first appears rather tautological: entrepreneurial
ecosystems are systems that produce successful entrepreneurship, and where there is a lot
of successful entrepreneurship, there is apparently a good entrepreneurial ecosystem. Such
tautological reasoning ultimately offers little insight for public policy. Second, the
approach as yet provides only long laundry lists of relevant factors without a clear reason-
ing of cause and effect. These factors do provide some focus, but they offer no consistent
explanation of their coherence or their interdependent effects on entrepreneurship—and,
ultimately, on aggregate welfare. And third, it is not clear which level of analysis this
approach is targeting. Geographically, it could be a city, a region or a country. It can
also be other systems, less strictly defined in space, such as sectors or corporations.
So, the approach offers insufficient adequate explanations and has not been clearly
demarcated. Insights into the fundamental causes of the entrepreneurial ecosystems are
not given. The study of the World Economic Forum (2013), for example, concludes
that access to markets, human capital and finance are most important for the growth of
entrepreneurial companies. But these can best be seen as superficial causes, not as the fun-
damental causes for the success of ecosystems—for human resources and finance are, after
all, largely dependent on the underlying institutions regarding education and financial
markets (Acemoglu et al.,2005). For an adequate explanation, we need a distinction
between necessary and contingent conditions, while for policy thinking there must be a
clear definition of the role of the government and other public organizations. With
respect to the consequences of entrepreneurial ecosystems, the approach has hardly
been elaborated so far. The question remains: how do entrepreneurial ecosystems
perform with the different forms of entrepreneurship (as output) and in terms of aggregate
welfare effects (as final outcome)? After more elaboration, the tautology will probably dis-
appear. Constructive synthesis of, on the one hand, the previously mentioned elements of
the entrepreneurial ecosystem approach (Tables 1 and 2) and, on the other hand, the
insights from the existing empirical studies on entrepreneurship and (regional) economic
1764 E. Stam
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development (Fritsch, 2013; Stam & Bosma, 2015a) could provide a better framework for
regional policy.
4. Constructive Synthesis
The entrepreneurial ecosystem approach has so far been constructed ad hoc by different
authors, without any shared definition. A definition that nevertheless seems widely appli-
cable is that of “the entrepreneurial ecosystem as a set of interdependent actors and factors
coordinated in such a way that they enable productive entrepreneurship”. In this case,
entrepreneurial activity is considered the process by which individuals create opportunities
for innovation. This innovation will eventually lead to new value in society, and this is,
therefore, the “ultimate outcome” of an entrepreneurial ecosystem, while entrepreneurial
activity would be more an “intermediary output” of the system. This entrepreneurial
activity has many manifestations, such as innovative start-ups, high-growth start-ups
and entrepreneurial employees (Stam, 2014). Especially entrepreneurial employees
seem to be of great importance for new value creation in developed economies such as
Europe (Bosma et al.,2012,2014; Stam, 2013). The term productive entrepreneurship
refers to “any entrepreneurial activity that contributes directly or indirectly to net output
of the economy or to the capacity to produce additional output” (Baumol, 1993, p. 30),
which we interpret as entrepreneurial activity that creates aggregate welfare increases
(see Figure 1). Productive entrepreneurship might also include failed enterprises that
have provided a fertile breeding ground for subsequent ventures or inspired them, creating
net social value (“catalyst ventures”: Davidsson, 2005). Technically speaking, this means
that the total (social) value created by entrepreneurial activity should be more than the sum
of the (private) value created for the individual entrepreneurs (leaving distributional issues
aside).
To integrally bring together all aspects, a new model has been developed, as shown in
Figure 1. The new model includes insights from the previous literature (i.e. the aspects that
have been deemed important elements of entrepreneurial ecosystems), but most impor-
tantly, it provides more causal depth with four ontological layers (framework conditions,
systemic conditions, outputs and outcomes), including the upward and downward causa-
Figure 1. Key elements, outputs and outcomes of the entrepreneurial ecosystem.
Entrepreneurial Ecosystems and Regional Policy 1765
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tion, and intra-layer causal relations. Upward causation reveals how the fundamental
causes of new value creation are mediated by intermediate causes, while downward cau-
sation shows how outcomes and outputs of the system over time also feed back into the
system conditions. Intra-layer causal relations refer to the interaction of the different
elements within the ecosystem, and how the different outputs and outcomes of the ecosys-
tem might interact.
The elements of the entrepreneurial ecosystem that can be distinguished are framework
conditions and systemic conditions. Both are summarized in Figure 1. The framework
conditions include the social (informal and formal institutions) and the physical conditions
enabling or constraining human interaction. In addition, access to a more or less exogenous
demand for new goods and services is also of great interest. This access to buyers of goods
and services, however, is likely to be more related to the relative position of the ecosystem
than to the internal conditions of the ecosystem. These conditions might be regarded as
the fundamental causes of value creation in the entrepreneurial ecosystem. However, in
order to fully understand how these fundamental causes lead to this outcome, we first
need to gain insight into how systemic conditions lead to entrepreneurial activity.
The systemic conditions are the heart of the ecosystem: networks of entrepreneurs, lea-
dership, finance, talent, knowledge and support services. The presence of these elements
and the interaction between them predominantly determine the success of the ecosystem.
Networks of entrepreneurs provide an information flow, enabling an effective distribution
of labour and capital. Leadership provides direction and role models for the entrepreneur-
ial ecosystem. This leadership is critical in building and maintaining a healthy ecosystem.
This involves a set of “visible” entrepreneurial leaders who are committed to the region.
Access to financing—preferably provided by actors with knowledge of entrepreneur-
ship—is crucial for investments in uncertain entrepreneurial projects with a long-term
horizon (see e.g. Kerr & Nanda, 2009). But perhaps the most important element of an
effective entrepreneurial ecosystem is the presence of a diverse and skilled group of
workers (“talent”: see e.g. Lee et al.,2004). An important source of opportunities for
entrepreneurship can be found in knowledge, from both public and private organizations
(see e.g. Audretsch & Lehmann, 2005). Finally, the supply of support services by a variety
of intermediaries can substantially lower entry barriers for new entrepreneurial projects,
and reduce the time-to-market of innovations (see e.g. Zhang & Li, 2010).
The question at what level the entrepreneurial ecosystem approach might be best appli-
cable has not been answered yet. This would depend on the spatial scale on which the
elements are achieved, on the one hand, and how they are limited, on the other hand.
For most system elements it seems possible to demarcate them at a regional (sub-national)
level (e.g. regional labour markets), while the conditions can be designed on both regional
and national levels (e.g. national laws and regulations) (cf. Stam & Bosma, 2015b). In
addition, entrepreneurs of high-growth firms and especially entrepreneurial employees
in large established firms could act as ecosystem connectors on a global scale, connecting
distinct regional entrepreneurial ecosystems in their role as knowledge integrators (Stern-
berg, 2007; Malecki, 2011).
5. Conclusion
The entrepreneurial ecosystem approach intuitively evokes recognition and acknowledge-
ment among public and private stakeholders of regional economies. A critical review
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reveals that many insights reflect outcomes of decades of research into entrepreneurship
and regional development in the past. The approach, therefore, contains no new separate
insights. However, the entrepreneurial ecosystem approach provides a framework for the
integration of insights from the academic literature on regional entrepreneurship, and the
approach includes valuable novel contributions. First, the system approach builds up from
the level of the entrepreneur in order to better understand the context of the entrepreneur-
ship. Such a system approach also gives clues to identify the weakest link that mostly
limits the performance of the entrepreneurial ecosystem (Acs et al.,2014). A second
novel contribution is the prominent place given to the entrepreneurs themselves to build
the entrepreneurial ecosystem and keep it healthy, fed by the other stakeholders relevant
to the ecosystem. Although causal relations within the system and the effects on entrepre-
neurship and value creation have not yet been studied sufficiently, the entrepreneurial eco-
system approach offers valuable elements for an improved understanding of the
performance of regional economies. The approach emphasizes interdependencies within
the entrepreneurship context, and it provides a bottom-up analysis of the performance
of regional economies, without fixating on individual entrepreneurs. The approach also
feeds the shift in entrepreneurship policy from the quantity to the quality of entrepreneur-
ship. In line with Thurik et al. (2013), the next shift would be from regional “entrepreneur-
ship policy” to policy for an “entrepreneurial regional economy”, that is, an
entrepreneurial ecosystem. So regional policy will not be about maximizing a certain indi-
cator of entrepreneurship, but about creating a context, a system, in which productive
entrepreneurship can flourish.
Acknowledgements
I would like to thank Niels Bosma and Jan Peter van den Toren and the two anonymous
reviewers for their valuable comments on prior versions of this paper.
Disclosure statement
No potential conflict of interest was reported by the author.
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... Rather, new venture creation activities are deeply embedded within and enabled by the entrepreneurial ecosystem (Kimjeon and Davidsson, 2021). The ecosystem concept describes spatial communities consisting of multiple interdependent and co-evolving actors involved in the entrepreneurial opportunity identification, pursuit, and new venture creation processes (Acs et al., 2017;Audretsch et al., 2012;Autio et al., 2018Autio et al., , 2014Feldman et al., 2019;Isenberg, 2011;Spigel, 2017;Spigel and Harrison, 2018;Stam, 2015;Stam and van de Ven, 2021). ...
... We contribute to the burgeoning entrepreneurial ecosystem literature by offering a "resource-dynamic" account, complementing the "resource-provision" account of entrepreneurial ecosystems as resource allocation systems (Acs et al., 2017;Audretsch et al., 2012;Autio et al., 2014;Feldman et al., 2019;Isenberg, 2011;Spigel, 2017;Spigel and Harrison, 2018), which addresses the necessity of facilitating sufficient resource dynamics within and outside of the ecosystems, instead of seeking optimal combinations and "recipes" of regional resources, in pursuit of ecosystem competitiveness and long-term "ecosystem health" (Stam, 2015). Our findings also contribute to the regional entrepreneurship literature by elaborating on the feedback impacts of regional entrepreneurship on regional resources (Acs et al., 2014;Armington and Acs, 2002;Feldman, 2014;Müller, 2016;Qian et al., 2013). ...
... The entrepreneurial ecosystem concept was first proposed by Cohen (2006), building upon entrepreneurial systems (Spilling, 1996) and infrastructure (Van De Ven, 1993) as well as business ecosystem (Iansiti and Levien, 2004;Moore, 1993) literature to describe a community consisting of various components such as formal and informal networks, physical infrastructure, culture and various supporting organizations that enables the creation of new ventures (Bergman and McMullen, 2021). Since then, scholarly interests in entrepreneurial ecosystem have burgeoned, as this concept provides a useful lens to study entrepreneurship in relation to regional structures and contexts (Acs et al., 2017;Audretsch et al., 2012;Autio et al., 2014;Daniel Isenberg, 2014;Feldman et al., 2019;Isenberg, 2011;Spigel, 2017;Spigel and Harrison, 2018;Stam, 2015;Wurth et al., 2021). ...
... The Global Entrepreneurship Monitor (GEM) Ecosystem Index (ESI) was applied to Nova Scotia, Canada to evaluate the ecosystem in 2019 using the Stam (2015) model based on 10 pillars that make up the quality of any ecosystem. The results indicated that Nova Scotia constitutes a developing ecosystem that enjoys several strengths and that Nova Scotia is positioned competitively within the ranking of the Canadian ecosystems considered in 2019 (i.e., Alberta and Montreal). ...
... Source: Stam (2015) ...
... The assessment of entrepreneurial ecosystems is based upon the widely cited theoretical model developed by Eric Stam and Ben Spigel (2016). Based on a comprehensive review of existing research, including related concepts such as industrial districts, clusters and innovation systems, Stam (2015) created the theoretical model of 10 key ecosystem elements (Figure 1.3). ...
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The Global Entrepreneurship Monitor Ecosystem Index Methodology was applied to Nova Scotia, Canada, to evaluate the ecosystem in 2019 using the Stam (2015) model based on 10 pillars that make up the quality of any ecosystem. The results indicated that Nova Scotia constitutes a developing ecosystem that enjoys several strengths and that Nova Scotia is positioned competitively within the ranking of the Canadian ecosystems considered in 2019 (i.e., Alberta and Montreal). The report presents findings on the perceptions of the strengths and weaknesses of the 10 pillars of Nova Scotia's entrepreneurial ecosystem.
... The model suggested by Stam includes value creation as part of the system and focuses on casual linkages among different actors of an EE (Stam, 2015). Van In each domain, individual stakeholders can be identified who have an interest in growth and progress of more companies. ...
... The EE concept now has a solid place in the entrepreneurship literature (Acs et al., 2017;Alvedalen & Boschma, 2017;Cao & Shi, 2020;Malecki, 2018;Theodoraki et al., 2018), making it easier to both account for the role of context (Van De Ven, 1993;Welter & Gartner, 2016) in entrepreneurial dynamics and emphasize the roles of entrepreneurs (Acs et al., 2017;Stam, 2015). The term appeared in the mid-1990s to explain the dynamics of iconic regions such as Silicon Valley (Bahrami & Evans, 1995) and began spreading in the early 2000s (Cohen, 2006). ...
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The body of literature on entrepreneurial ecosystems (EEs) is rapidly expanding, but few studies have simultaneously examined their complexity, dynamics, and context. To better understand how they evolve, we introduce the notion of EE path dependence based on an original combination of an evolutionary approach and complex adaptive system theory. We thus present a whirlwind model that takes the form of subecosystems and that integrates a structural approach with attributes and a dynamic approach with sequences. Context is addressed through narratives and entrepreneurial stories. We conducted a case study on the EE of Montpellier, France. To characterize the subecosystems, we quantified the attributes using NVivo software, showing their links and evolution over time. The results shed light on the subecosystems that contributed the most to the entrepreneurial dynamics. This study contributes to extending path dependence theory to EEs. The results may help policymakers rethink their development strategies by setting priorities in accordance with the drivers of their EEs.
... The ecosystem perspective in business research draws attention to how organizational activity is shaped by complex systems of interdependent actors (e.g., consumers, investors, government officials) and socio-economic forces (e.g., values, institutions, narratives) that extend beyond firm, industry, and sectoral boundaries (Dattée, Alexy, & Autio, 2018;Fuller, Jacobides, & Reeves, 2019;Ganco, Kapoor, & Lee, 2020;Jacobides, Cennamo, & Gawer, 2018;Shipilov & Gawer, 2020). The ecosystem lens has become prevalent in studies of entrepreneurship, with scholars acknowledging that entrepreneurial activity does not occur in a vacuum but is place-based, context-specific, and embedded in entrepreneurial ecosystems (EEs)-the interconnected actors and forces that support entrepreneurial activity within geographic areas (Acs, Stam, Audretsch, & O'Connor, 2017;Berger & Kuckertz, 2016;Bouncken & Kraus, 2021;Roundy, Bradshaw, & Brockman, 2018;Spigel, 2017a;Stam, 2015;Thompson, Purdy, & Ventresca, 2018). Research focusing on vibrant EEs in cities and regions with high levels of entrepreneurial activity, such as Silicon Valley, Bangalore, and Stockholm, has made strides in understanding ecosystem development (Cao & Shi, 2020;Roundy, 2019;Goswami, Mitchell, Bhagavatula, 2018). ...
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Entrepreneurs require human resources to establish and scale their ventures; however, constraints often prevent entrepreneurs from investing in formal human resource systems. How entrepreneurs overcome human resource challenges by leveraging their entrepreneurial ecosystems as informal inter-organizational talent management systems has been overlooked by scholars. We propose a model of entrepreneurial ecosystem human resource management, theorizing that ecosystem participants collectively perform the human resource management function for entrepreneurship communities. Drawing from economic rents theory, we explain how entrepreneurial ecosystems encourage a form of meta-organizational human resource management that allows ecosystem participants to coordinate talent acquisition, learning and development, performance management and rewards, and retention. Coordinated entrepreneurial ecosystems improve entrepreneurial performance by sourcing talent, onboarding selected members, enculturating ecosystem values, developing entrepreneurial skills, and retaining human resources, which in turn generates rents. We discuss how our theory catalyzes research at the HR and entrepreneurial ecosystems interface and reveals insights for practitioners.
... A major consideration regarding the future of urban ecosystems is the on-going nature of the institutional environment within which these ecosystems previously flourished (Mack and Mayer, 2016;Audretsch and Belitski, 2017;Audretsch et al., 2021). As already indicated, the hallmark of these urban ecosystems is the self-organisation that has arisen in cities as a result of the growth of entrepreneurially innovative environments such as co-working and incubator spaces, as well as the local availability of capital for innovation and the plethora of opportunities through networking events such as meet-ups and the like (Stam, 2015;Madaleno et al., 2021). Table 3 indicates that although the majority of respondents consider that demand for innovation spaces and networks will either be unchanged or improve, there are also a significant proportion of respondents who anticipate some reduction in demand over the next five years. ...
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The concentration of the COVID-19 disease in densely populated cities may lead to the long-term retreat of both people and economic activity from these urban areas. Furthermore, there is the possibility that an upshot from the pandemic is that human behavioural changes may impact on the nature, rates and spatial configuration of innovation, especially within and across cities. To examine these potential changes in the urban innovation landscape this report draws on findings from data gathered through interviews and surveys with informants over two time periods: prior to the pandemic (2018/19) and during the fallout from the pandemic (2021).
Chapter
Most research on entrepreneurial ecosystems employ static models which oversee its dynamic evolution. Additionally, empirical studies tend to be confined to developed regions that possess well-established ecosystems with existing structures and well-defined actors. Such an approach can often neglect the understanding of the ecosystem as an emergent phenomenon from the embryonic phase to maturity, especially when considered in the context of an underdeveloped region. The aim of this article is to serve as a conceptual basis for the development of university-based entrepreneurial ecosystems in the Sub-Saharan African context. We propose a dynamic framework that highlights the role of universities in enabling human capital for entrepreneurship, especially in places with insufficient top-down planning and established mechanisms that would normally drive such an ecosystem. The case study illustrates on a practical level how a nascent entrepreneurial HUB is enabling the development of human capital in the city of Maxixe, Mozambique, thereby serving as a catalyst for a nascent entrepreneurial ecosystem in the region. Emulating the HUB itself, the article brings together theory and praxis, believing that optimal practical action is that which is rooted in analysis and conceptual understanding, transforming academic research into the means from which to solve real-world needs.
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In entrepreneurial ecosystems (EEs), geographical and contextual factors play a big role in shaping the knowledge bases for digital innovation. While cities around the world compete to be perceived as successful “tech startup hubs”, proactive urban strategies are needed to create knowledge spillovers into EEs. This study explores the evolution of artificial intelligence (AI) knowledge practices in the EEs of Berlin and Sydney by using knowledge-spillover theory of entrepreneurship. The study utilizes a bibliometric analysis of secondary data in combination with exploratory stakeholder interviews conducted for both cities. Findings underline the critical role of experimental knowledge in driving the momentum of the EEs and the supporting role of policies imprinting knowledge practices. The paper shows how the dynamics of EEs can be explored empirically and raises awareness of the role of specialised and integrated policies in determining a city’s overall success in building EEs.
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China’s cultural policy has been a key driver to the formation and development of the domestic digital game industry. In line with the nationwide promotion of “Mass Entrepreneurship and Innovation” since 2015 (He et al., 2019 He, C., Lu, J., & Qian, H. (2019). Entrepreneurship in China. Small Business Economics, 52(3), 563–572. https://doi.org/10.1007/s11187-017-9972-5[Crossref], [Web of Science ®] , [Google Scholar]), there has witnessed an increasing emphasis on entrepreneurship in the related cultural policies at the local level, especially in China’s major cities known for high-tech creative clusters. Focusing on the thriving gaming entrepreneurship in Shanghai, this article adopts an entrepreneurial ecosystem approach to examine the under-studied relationship between the creation of gaming ventures and the relevant set of cultural policy. Drawing on 33 gaming entrepreneur interviews complemented by policy content, this article provides rich accounts of how gaming entrepreneurs react to and reflect on the local cultural policy in relation to two key elements of the entrepreneurial ecosystem: financial capital availability and support services. The findings shed new light on creative autonomy and cultural policy in China.
Conference Paper
Studies on developing social enterprises suggest that resilience can be achieved through supportive stakeholder relationships and networks in the entrepreneurial ecosystem. This ecosystem is important for social enterprises as they are confronted with uncertain and complex conditions emerging from their pursuit of both social and commercial objectives which tend to reveal internal weaknesses and tensions. Although prior work on entrepreneurial ecosystem has made significant progress, the processes involved in interdependence need to be explored as they create and reproduce the overall ecosystem. This study attempts a shift of focus from the identification of individual components to a view which identifies entrepreneurial ecosystem as a complex and nonlinear system that changes, adapts, and evolves over time. The feedback-guided analysis using the cultural adaptation template is applied towards developing conceptual models to examine the interdependencies in the ecosystem aimed at relationships between and among cultural, environmental, political and social factors. This is done through documenting the experiences of Philippine social enterprises to understand the feedback structures that shape its entrepreneurial ecosystem. The models may serve as an assessment tool to determine management issues, its root causes and the non-obvious interactions that shape system performance over time.
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Today, economic growth is widely understood to be conditioned by productivity increases which are, in turn, profoundly affected by innovation. This volume explores these key relationships between innovation and growth, bringing together experts from both fields to compile a unique Handbook. © Philip Cooke, Bjørn Asheim, Ron Boschma, Ron Martin, Dafna Schwartz and Franz Tödtling 2011. All rights reserved.
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In this report we discuss, synthesize and further develop the entrepreneurial ecosystem approach. A dynamic entrepreneurial ecosystem approach is developed to analyze entrepreneurship in the Netherlands: how it has evolved, why the rate of solo self-employment has increased and how the entrepreneurial ecosystem can be adapted to increase productive entrepreneurship. We summarize and extend the entrepreneurial ecosystem literature with a model that includes framework conditions (formal institutions, culture, physical infrastructure, and demand) and systemic conditions (networks, leadership, finance, talent, new knowledge, and support services) that affect entrepreneurial outputs (entrepreneurial activity) and outcomes indicating value creation (productivity, income, employment and well-being). The Netherlands has seen a remarkable rise of independent entrepreneurship in the last decade. However, this rise of independent entrepreneurship reveals to be predominantly a rise in solo self-employment, not an increase in growth oriented and innovative entrepreneurship. This shift can partly be explained by the specific institutional context of the Netherlands. The rise of self-employment in the Netherlands seems to have lowered unemployment rates, but it is unlikely that the rise of self-employment and new firm formation has positively affected innovation and in the end productivity growth over the period 1987-2013. This rise of self-employment and new firm formation and stagnation of innovation is what we label the Dutch Entrepreneurship Paradox. Especially favorable fiscal treatment of self-employed, and an increasing demand for flexible labor, stimulated the growth in the number of solo self-employed since the early 2000s. There is a major policy task not to let entrepreneurship be a driver of productivity decline (or at best a flexible belt in the labor market), but to stimulate productive entrepreneurship instead. In order to increase productive entrepreneurship in the Netherlands, we propose four policy actions. Each action addresses a change in one of the four framework conditions of the entrepreneurial ecosystem: changing formal institutions to enable labor mobility (development and circulation of talent); opening up public demand for entrepreneurs, to provide finance for new knowledge creation and application; stimulating a culture of entrepreneurship and entrepreneurial leadership; adapting or creating physical infrastructure to enhance knowledge circulation and networks.
Article
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Today, economic growth is widely understood to be conditioned by productivity increases which are, in turn, profoundly affected by innovation. This volume explores these key relationships between innovation and growth, bringing together experts from both fields to compile a unique Handbook.
Chapter
Discussions of the link between firm size and innovation are outmoded because the boundaries of the firm have become fuzzy in recent decades. Strategic alliances — constellations of bilateral agreements among firms — are increasingly necessary to support innovative activities. Such alliances can facilitate complex coordination beyond what the price system can accomplish, while avoiding the dysfunctional properties sometimes associated with hierarchy. Antitrust law and competition policy need to recognize that these new organizational forms are often the functional antithesis of cartels, though they may have certain structural similarities. A more complete understanding of bilateral contracts and agreements ought to reveal when and how cooperation can support rather than impede innovation and competition. © 2003 by World Scientific Publishing Co. Pte. Ltd. All rights reserved.
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This wide-ranging Handbook is the first major compilation of the theoretical and empirical research that is forging the new and exciting paradigm of evolutionary economic geography.