Entrepreneurship ecosystem

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.

"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, 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.

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." 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.

Several academic researchers have begun to investigate entrepreneurial ecosystems as well. Spigel 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 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) 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: