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Journal of Innovation and Development
ISSN: 2958-4752 | Vol. 2, No. 3, 2023
158
The Influence of Top-Down Mode and Bottom-up Mode
to National Innovation and Entrepreneurship
Yaping Li*
School of Management and Economics, Beijing Institute of Technology, Beijing, 100081, China
* Corresponding author Email: 17688401002@163.com
Abstract: Innovation and entrepreneurship are critical drivers of economic growth and national development. The top-down
mode of management and organization involves a hierarchical approach, where decisions and directives are made by top-level
authorities and cascaded down to lower levels. This approach emphasizes centralized control, formal processes, and standardized
procedures. On the other hand, the bottom-up mode of management and organization emphasizes autonomy, empowerment, and
participation of individuals and teams at all levels of the organization. This approach encourages creativity, experimentation, and
innovation from the grassroots level. We analyze the impact of these two modes on national innovation and entrepreneurship by
examining their implications for organizational culture, leadership styles, decision-making processes, and resource allocation.
We also review empirical evidence from various countries and industries to understand the contextual factors that influence the
effectiveness of these modes in fostering innovation and entrepreneurship. Our findings suggest that both top-down and bottom-
up modes have their strengths and limitations in driving innovation and entrepreneurship at the national level. While top-down
approaches may be effective in promoting large-scale projects and initiatives, bottom-up approaches can foster a culture of
innovation and entrepreneurship across diverse sectors and industries. We propose that a balanced approach, which combines
elements of both modes, may be the most effective in promoting national innovation and entrepreneurship. We conclude by
discussing policy implications and future research directions in this area.
Keywords: Entrepreneurship; National Economic Promotion; Innovation Policy; Institutions; National Development.
1. Introduction
The Innovation, derived from the Latin word "innovāre"
meaning to reform or change, has long been recognized as a
crucial tool for entrepreneurs to discover new potential for
their businesses or services (Peter Drucker, 2014). It is
considered a key driver of economic activity, and its role in
the success or failure of companies and countries has gained
increasing recognition in recent years (Fromhold - Eisebith et
al., 2005). However, the question of who should guide
innovation, firms at the individual level or countries from a
macroscopic view, has sparked debates about the appropriate
position of innovation in the overall development of a nation.
To address this question, systematic and scientific theories
have emerged from the field of organization and management,
proposing two distinct modes of management and
organization that shape the motivation for innovation in
different ways: The Top-Down mode and the Bottom-Up
mode. These two modes offer different perspectives on how
innovation should be driven, and their implications for
national innovation and entrepreneurship are a subject of
ongoing discourse.
This review paper aims to examine the influence of the
Top-Down mode and the Bottom-Up mode on national
innovation and entrepreneurship. Firstly, we will discuss the
impact of these two modes on a country's innovation
landscape, exploring their strengths and limitations from a
theoretical and influential perspective. We will delve into the
implications of these modes on organizational culture,
leadership styles, decision-making processes, and resource
allocation, and draw insights from empirical evidence across
various countries and industries. Secondly, we will
investigate how these two modes influence the
entrepreneurship ecosystem at the national level, including
their effects on start-up activity, business development, and
economic growth. We will analyze the role of these modes in
fostering a culture of entrepreneurship and supporting
entrepreneurial initiatives in a country.
Through this review, we aim to highlight the differences
between the Top-Down and Bottom-Up modes and their
potential implications for national innovation and
entrepreneurship. We argue that there is no one-size-fits-all
approach to innovation and entrepreneurship promotion, and
that industry-specific strategies should be considered. We
conclude by discussing the policy implications of these
findings and identifying future research directions in this area.
2. Top-Down and Bottom-Up Policy
Modes
2.1. Top-Down Policy-Making Mode: Shaping
National Innovation and Entrepreneurship
through Elite Groups
In recent years, the concept of innovation has gained
increasing attention as a critical driver of economic growth
and development in many countries. The literature on
innovation and entrepreneurship has explored different modes
of policy-making and management that can influence
innovation at the national level. One of the most discussed
modes is the top-down policy-making mode, which refers to
the process by which the elite groups of countries transform
their values and interests into public policies.
The top-down policy-making mode involves several
independent paths through which policies are connected from
the top to the bottom. These processes have their
independence, and each process contains some professional
functional differences of major organizations (Figure 1).
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However, all processes tend to be intertwined vertically and
horizontally, allowing for synchronous communication of
policy choices among the elite group. This mode is
characterized by a centralized approach, where policy
decisions are made by the elite groups at the top of the
hierarchy and implemented downwards.
For example, in countries with a strong government-led
approach to innovation policy, such as China, the top-down
policy-making mode has been used to drive innovation and
entrepreneurship. The Chinese government has set ambitious
national goals for innovation and has implemented policies
and strategies to achieve these goals. The government has
established specialized agencies, such as the Ministry of
Science and Technology and the National Development and
Reform Commission, to coordinate and implement
innovation policies across different sectors and regions. These
policies include funding for research and development, tax
incentives for innovation, and support for technology transfer
and commercialization. The top-down policy-making mode
in China has been instrumental in promoting innovation and
entrepreneurship in key industries, such as advanced
manufacturing and high-tech sectors.
Figure 1. Top-down policy mode
2.2. Bottom-Up Policy-Making Process:
Promoting Innovation and
Entrepreneurship through Public
Participation
In contrast to the top-down policy-making mode, the
bottom-up policy-making process is promoted by the public,
and interest representative groups act as an important
intermediary between individuals and their governments. The
bottom-up model is characterized by a more decentralized and
participatory approach to policy-making, where individuals
and organizations at the grassroots level have a direct
influence on policy decisions.
Interest representative groups, such as industry
associations, labor unions, and advocacy organizations, play
a crucial role in the bottom-up policy-making process. These
groups represent the interests of individuals and communities
in lobbying, attending congressional hearings, contacting
government officials, and overseeing legislative procedures
and executive enforcement. They provide a platform for
public participation in policy-making, allowing diverse
voices to be heard and considered in the policy formulation
process.
For example, in countries with a strong tradition of civil
society participation, such as Sweden, the bottom-up policy-
making process has been used to promote innovation and
entrepreneurship. The Swedish government has a long-
standing tradition of engaging with civil society organizations
in policy-making, including those focused-on innovation and
entrepreneurship. These organizations provide input and
feedback on policies related to innovation, entrepreneurship,
and economic development. This bottom-up approach allows
for a more inclusive and participatory policy-making process,
where diverse perspectives and ideas can be considered.
Figure 2. Down-top policy mode
While the top-down and bottom-up policy-making modes
differ in their approach, they can both play a role in shaping
national innovation and entrepreneurship. The top-down
mode involves elite groups of countries transforming their
values and interests into public policies, while the bottom-up
mode promotes public participation through interest
representative groups. It is important to note that there is no
universal blueprint for promoting innovation and
entrepreneurship, and an industry-specific approach should
be adopted to effectively promote innovation and
entrepreneurship. Both top-down and bottom-up approaches
have their strengths and limitations, and the choice of policy
mode should be based on the specific context and goals of a
country or region. In the following sections, we will further
explore the influence of these two modes on national
innovation and entrepreneurship, drawing
3. The Influence of Two Modes to the
Country’s Innovation after COVID-
19
The influence of the top-down and bottom-up modes on a
country's innovation and entrepreneurship can be observed in
various contexts, including the post-pandemic period after
COVID-19. The top-down mode, characterized by policies
formulated and implemented by elite groups, can provide
policy direction and involve a more centralized and
hierarchical approach. For example, during the COVID-19
pandemic, many countries implemented top-down policies
such as lockdowns, travel restrictions, and economic stimulus
packages to address the crisis and support innovation and
entrepreneurship in specific sectors.
On the other hand, the bottom-up mode, which involves a
more participatory and decentralized approach, can be
effective in fostering entrepreneurship and innovation,
particularly when there is a considerable number of firms
already in the industry. For instance, during the post-
pandemic recovery phase, bottom-up initiatives such as
grassroots innovation, community-driven entrepreneurship,
and local innovation clusters have emerged as effective ways
to stimulate economic growth and innovation at the regional
level. One example of the top-down mode's influence on
innovation and entrepreneurship is the role of government in
providing public goods. Governments can invest in
infrastructure, education, and research and development,
which may not be effectively addressed by private firms in
the bottom-up mode. These top-down investments can create
an enabling environment for innovation and entrepreneurship,
by providing the necessary physical and human capital, and
fostering a culture of innovation.
On the other hand, the bottom-up mode can foster
innovation and entrepreneurship through trial and error.
Entrepreneurial teams and new enterprises can experiment
with new technologies, models, and business approaches,
seeking to create new demand realization models. This
bottom-up approach allows for a more market-driven
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approach to innovation and entrepreneurship, as it is based on
information symmetry, organizational effectiveness, and
governance system and capacity. In the context of China's
economic transformation, entrepreneurship and innovation
are seen as fundamental to driving economic growth. China
has adopted a bottom-up approach to entrepreneurship and
innovation, with an emphasis on research and development,
design, and creation of new technologies, models, and
enterprises. This approach is seen as the micro-foundation of
a market economy, and it is driving the development of a
socialist market economic system "from the bottom up".
The influence of the top-down and bottom-up modes on a
country's innovation and entrepreneurship is highly industry-
specific, and both modes have their advantages. The top-
down mode can provide policy direction and public goods,
while the bottom-up mode can foster entrepreneurship and
innovation through trial and error and market-driven
approaches. It is important to adopt an industry-specific
approach when promoting innovation and entrepreneurship,
taking into consideration the strengths and weaknesses of
both top-down and bottom-up modes, and leveraging them
accordingly to create a conducive environment for innovation
and entrepreneurship to thrive.
4. Risk and Opportunity Analysis of
Top-Down and Bottom-Up
Entrepreneurial Modes in the Post-
Pandemic Period
The COVID-19 pandemic has had a profound impact on
global economies, leading to significant changes in the
entrepreneurial landscape. As countries navigate the post-
pandemic period, two distinct modes, namely top-down and
bottom-up approaches, have continued to shape
entrepreneurship in various countries. In this discussion, we
will explore the risk and opportunity analysis of these two
modes using certain marketing models.
4.1. Top-Down Approach
Stabilizing Businesses and Jobs One example of a top-
down approach in the post-pandemic period is the
implementation of the Paycheck Protection Program (PPP) in
the United States. The PPP aimed to provide financial support
to small businesses affected by the pandemic, with the goal of
stabilizing the economy by ensuring that businesses remained
open and employees retained their jobs. This approach
involved government intervention and policy measures to
support entrepreneurship and mitigate the impact of the
pandemic on businesses.
1)Risk Analysis:
Risk of over-reliance on government support: Businesses
that relied solely on PPP funds may face risks if the program
ends or is not extended. This could result in a sudden loss of
financial support and potential business closures.
Risk of lack of flexibility: PPP funds may come with strict
guidelines and restrictions on how the funds can be used,
limiting the flexibility and adaptability of businesses to
changing market conditions.
Risk of unequal distribution: There may be challenges in
ensuring that PPP funds reach all businesses, particularly
small and minority-owned businesses, equally, resulting in
disparities in support and opportunities.
2)Opportunity Analysis:
Opportunity for business continuity: The PPP provided
businesses with the opportunity to remain operational and
retain their employees during the pandemic, helping them to
weather the crisis and potentially continue their operations in
the post-pandemic period.
Opportunity for market stability: The top-down approach
of the PPP aimed to stabilize the economy by keeping
businesses open, which could contribute to maintaining
market stability and preventing further economic downturn.
Opportunity for government-business collaboration: The
PPP highlighted the potential for collaboration between the
government and businesses in times of crisis, which could
foster trust and cooperation between different stakeholders in
the entrepreneurial ecosystem.
4.2. Bottom-Up Approach
Entrepreneurship and Innovation in the Gig Economy The
pandemic also led to an increase in remote work and the rise
of the gig economy, where individuals work as independent
contractors instead of being employed by a company. This
bottom-up approach allows individuals to have more control
over their work and schedule, leading to increased
entrepreneurship and innovation in the gig economy.
1)Risk Analysis:
Risk of uncertain income stability: Gig economy workers
may face risks related to irregular and uncertain income
streams, as their earnings depend on the demand for their
services and may fluctuate.
Risk of lack of social protections: Gig economy workers
may not have access to traditional employee benefits such as
health insurance, retirement plans, and paid leave, which
could pose risks to their financial security and well-being.
Risk of market saturation: The gig economy may become
saturated with increased competition, leading to challenges in
standing out and finding profitable opportunities.
2)Opportunity Analysis:
Opportunity for flexible work arrangements: The gig
economy provides individuals with the opportunity to have
more control over their work schedule and flexibility,
allowing them to pursue entrepreneurial opportunities and
adapt to changing market conditions.
Opportunity for innovation: The bottom-up approach of the
gig economy encourages entrepreneurship and innovation, as
individuals are free to pursue their unique ideas and solutions
in response to emerging demands and challenges.
Opportunity for diverse income streams: Gig economy
workers may have the opportunity to diversify their income
streams by offering different services or working for multiple
platforms, potentially increasing their earning potential and
financial resilience.
The top-down and bottom-up entrepreneurial modes have
continued to shape the entrepreneurial landscape in the post-
pandemic period, with each approach having its strengths and
weaknesses. The top-down approach, exemplified by
government interventions such as the PPP in the United States,
aims to stabilize businesses and jobs, providing opportunities
for business continuity and market stability. However, it also
carries risks such as over-reliance on government support and
lack of flexibility. On the other hand, the bottom-up approach,
seen in the rise of the gig economy and remote work,
encourages entrepreneurship and innovation, providing
opportunities for flexible work arrangements and diverse
income streams. However, it also comes with risks such as
uncertain income stability and lack of social protections.
Furthermore, our discussion highlights that the
161
effectiveness of these modes may depend on industry-specific
factors, such as the number of existing firms. The bottom-up
mode may show its cluster effect only when there are enough
players in the industry, while the top-down mode may
contribute to the enrichment of the economic structure
through its signal effect. Therefore, there is no universal
solution for promoting innovation activity, and policymakers
and entrepreneurs should consider industry-specific factors
when formulating policies.
5. Conclusion
In conclusion, a balanced approach that considers both top-
down and bottom-up modes may be necessary to foster
entrepreneurship and innovation in the post-pandemic period.
This may involve government interventions to stabilize
businesses and jobs while also providing flexibility and
support for bottom-up entrepreneurial initiatives. By
understanding the risks and opportunities associated with
these modes and considering industry-specific factors,
policymakers can create an enabling environment for
entrepreneurial activity and promote innovation in a post-
pandemic world.
Competing Interests
All authors declare no Competing Financial or Non-
Financial Interests.
Data Availability
The data that support the findings of this study are available
from the corresponding author upon reasonable request.
Funding Declaration
This research was funded by Asia Education Institution Pte
Ltd (Singapore) Grant Call (Call 1/2023) _AEI (Project ID
AEI-001), Singapore.
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