What is a healthy entrepeneurial ecosystem? Answer + application to the Netherlands

1. A Healthy
Entrepreneurial Ecosystem
Workshop Entrepreneurial Ecosystems, Utrecht, 14 July 2014
Prof Dr Erik Stam

2. NL employment of the 5 largest
multinational firms, 1985-2012 (-74%)
0
10000
20000
30000
40000
50000
60000
70000
80000
1985 1997 2003 2007 2012
Philips DSM AKZO Shell Unilever

5. Outline
I. Entrepreneurial Ecosystem concept
II. NL situation: Entrepreneurship Paradox
III. NL policy

6. I. Entrepreneurial Ecosystem Concept

7. A Healthy
Entrepreneurial Ecosystem?
An entrepreneurial ecosystem is an interdependent set of actors
that is governed in such a way that it enables entrepreneurial action

8. Entrepreneurial activity
Entrepreneurial Ecosystem Elements

9. Formal
institutions
Framework
conditions
Systemic
conditions
Culture
Networks Leadership Finance Talent
Physical
infrastructure
Demand
New
knowledge
Innovative
start-ups
High-growth
start-ups
Entrepreneurial
employee activity
Productivity Income Employment Well-being
Support services
/ intermediaries
Value creation
Outcomes
Outputs
Entrepreneurial activity
Entrepreneurial Ecosystem Elements

10. Formal
institutions
Framework
conditions
Systemic
conditions
Culture
Networks Leadership Finance Talent
Physical
infrastructure
Demand
New
knowledge
Support services
/ intermediaries
Entrepreneurial Ecosystem Elements
The framework conditions that enable/constrain the development and
interaction of actors in the entrepreneurial ecosystem

11. Formal
institutions
Framework
conditions
Systemic
conditions
Culture
Networks Leadership Finance Talent
Physical
infrastructure
Demand
New
knowledge
Support services
/ intermediaries
Entrepreneurial Ecosystem Elements
Hermann Hauser - Cambridgeshire

12. Formal
institutions
Framework
conditions
Systemic
conditions
Culture
Networks Leadership Finance Talent
Physical
infrastructure
Demand
New
knowledge
Support services
/ intermediaries
Entrepreneurial Ecosystem Elements

13. II. NL situation: Entrepreneurship Paradox

14. A Healthy NL
Entrepreneurial Ecosystem?

15. NL: Entrepreneurship Paradox
• Amazing growth of entrepreneurship in the
Netherlands, 1987-2012
• Miracle: no country in which the TEA rate has
grown as much as in the Netherlands over the
period 2003-2012 (and precourse of rising new
firm formation and self-employment)
• Paradox: increasingly a matter of growing
number of solo self-employed, and low/mediocre
rates of growth-oriented entrepreneurship

16. Formal
institutions
Framework
conditions
Systemic
conditions
Culture
Networks Leadership Finance Talent
Physical
infrastructure
Demand
New
knowledge
Innovative
start-ups
High-growth
start-ups
Entrepreneurial
employee activity
Productivity Income Employment Well-being
Support services
/ intermediaries
Value creation
Outcomes
Outputs
Entrepreneurial activity
Entrepreneurial Ecosystem Elements
NOT SELF-EMPLOYMENT & NEW FIRMS PER SE

17. Self-Employment & New Firms, NL

18. Solo Self-Employed & Employers, NL

19. Formal
institutions
Framework
conditions
Systemic
conditions
Culture
Networks Leadership Finance Talent
Physical
infrastructure
Demand
New
knowledge
Innovative
start-ups
High-growth
start-ups
Entrepreneurial
employee activity
Productivity Income Employment Well-being
Support services
/ intermediaries
Value creation
Outcomes
Outputs
Entrepreneurial activity
Entrepreneurial Ecosystem Elements
NOT SELF-EMPLOYMENT & NEW FIRMS PER SE

20. 0
1
2
3
4
5
6
7
8
9
10
11
12
Belgium Germany Netherlands Sweden UK Israel US
Job growth expectations start-ups (2013)
20 or more jobs 5-19 0-5
Shareoftheadultpopulation

21. Entrepreneurial Employees

22. (Eco)systemic Causes & Consequences
• Positive feedback: virtuous circle (for self-employment!)
Changing
preferences
Changing
formal
institutions
Lower
entry
barriers
Higher
entry
rates
+ Context:
high labour protection,
concentrated financial sector,
+ Shocks:
1997-2001 dot.com boom&bust
2008+ financial crisis

23. Rise of solo-self employment
• more relevant as condition for entrepreneurial
ecosystem (“culture”), than as output
• But…, might be indicator of lack of ambitions,
and constrained labor mobility as well

24. (Eco)systemic Causes & Consequences
• Negative/no feedback
– No build up of system for high-growth start-ups (vicious
circle high-growth start-up scandals early 2000s: Baan, World Online)
a) Mobility of skilled labour: employment protection
legislation, non compete clauses
b) Capital market: VC, trade-sales, IPO
c) Lack of venturesome demand: innovative procurement
d) a)+b): Lack of serial entrepreneurs/informal investors
– No champion of intrapreneurship, like Nordic
countries (in spite of high levels of trust, knowledge
work, and decentralized decision making)

25. III. NL Policy

26. Towards a Healthy NL
Entrepreneurial Ecosystem

27. Formal
institutions
Framework
conditions
Systemic
conditions
Culture
Networks Leadership Finance Talent
Physical
infrastructure
Demand
New
knowledge
Innovative
start-ups
High-growth
start-ups
Entrepreneurial
employee activity
Productivity Income Employment Well-being
Support services
/ intermediaries
Value creation
Outcomes
Outputs
Entrepreneurial activity
Entrepreneurial Ecosystem Elements

28. Framework conditions
• 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 ambitious entrepreneurship
and entrepreneurial leadership;
• adapting or creating physical infrastructure to
enhance knowledge circulation and networks.

29. Improved Monitoring of
Entrepreneurial Ecosystem(s)
• National
• Regional
• Corporate
• …

30. Entrepreneurial Ecosystem Index NL
?

31. Entrepreneurial Ecosystem Index NL
0
2
4
6
8
10
12
14

32. Regelgeving Cultuur
Netwerken
Leider-
schap
Finan-
ciering
Talent
Fysieke
infrastructuur
Vraag
Nieuwe
kennis
DV
Bedrijven
Noord-Brabant

33. Research agenda
• What is the effect of leadership, role models,
mentoring on entrepreneurial activity?
• Relevant context(s)?
– Region, country, corporation, …
• Relative weight, interdependence, and
evolution of entrepreneurial ecosytem
elements?
• Better measures
• …

34. Conclusions
• Entrepreneurial ecosystem approach provides
new insights for public policy and
entrepreneurial leadership (leaders & feeders)
• Entrepreneurial ecosystem analysis as starting
point for discussions about changing
framework conditions and systemic conditions

35. A Healthy
Entrepreneurial Ecosystem
Workshop Entrepreneurial Ecosystems, Utrecht, 14 July 2014
Prof Dr Erik Stam