Startup: Definition, Characteristics, and Theories

 

The concept of an ‘entrepreneurial ecosystem’ refers to the interaction that takes place between a range of institutional and individual stakeholders so as to foster entrepreneurship, innovation and SME growth.

It was brought into prominence in 2010 by Professor Daniel Isenberg from Babson College through an article in the Harvard Business Review. However, the concept has its antecedents in earlier work relating to business and industry clustering, as well as the creation of National Innovation Systems (NIS) .

The term ‘entrepreneurial ecosystem’ was used to describe conditions in which the individual, enterprise and society come together to foster the generation of economic wealth and prosperity.

The concept of entrepreneurial ecosystems has gained popularity in recent years, but despite its popularity, there is not yet a widely shared definition of entrepreneurial ecosystems amongst researchers or practitioners.

The first component of the term is entrepreneurial: a process in which opportunities for creating new goods and services are explored, evaluated and exploited. The entrepreneurial ecosystem approach often narrows this entrepreneurship down to ‘high-growth start-ups’ or ‘scaleups’, claiming that this type of entrepreneurship is an important source of innovation, productivity growth, and employment.

It is clear that the entrepreneurial ecosystem approach does not by definition include the traditional statistical indicators of entrepreneurship, 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 .

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. Rather, the entrepreneurial ecosystem approach emphasizes that entrepreneurship takes place in a community of interdependent actors.

That is to say, entrepreneurial ecosystems focus on the cultures, institutions, and networks that build up within a region over time rather than the emergence of order within global markets.

Entrepreneurial activity, as an output of the entrepreneurial ecosystem, 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 is a more intermediary output of the system. This entrepreneurial activity has many manifestations, such as innovative start-ups, high-growth start-ups, and entrepreneurial employees.

REF

Growing and sustaining entrepreneurial ecosystems: What they are and the role of government policy,2014.

Enabling Entrepreneurial Ecosystems, 2015.