Entrepreneurship ecosystem

From Wikipedia, the free encyclopedia (Redirected from Entrepreneurship Ecosystem) Jump to: navigation, search The Entrepreneurship 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, international aid agencies, and the like. 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 (e.g., Ireland, Israel, Silicon Valley, Route 128, Iceland, etc.) many of the ecosystem elements are strong and typically have evolved more or less simultaneously. 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. In July 2010, the Harvard Business Review published an article by Babson Global Professor Daniel Isenberg entitled, How to Start an Entrepreneurial Revolution.[1] 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. There are several key conditions that typically define a healthy ecosystem. The ecosystem:

Is tailored around its own unique environment it does not seek to be something it isnt, like the next Silicon Valley Operates in an environment with reduced bureaucratic obstacles in which government policies support the unique needs of entrepreneurs and tolerate failed ventures Actively encourages and invites financiers to participate in new ventures, but access to money isnt without barriers for those planning new business ventures Is reinforced, not created from scratch, by government, academic or commercial organizations Is relatively free from, or is able to change, cultural biases against failure or operating a business Promotes successes, which in turn attract new ventures Often is supported by dialogue among various of the entrepreneurship stakeholders

To help global leaders understand and apply the benefits of entrepreneurship ecosystems, Babson College, ranked #1 for the best entrepreneurship program[2] founded the Babson Entrepreneurship Ecosystem Project (BEEP) in 2009,[3] through its subsidiary Babson Global.

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University-based Entrepreneurship Ecosystem In academic settings, entrepreneurship ecosystems commonly refer to programs within a university that focus on the development of entrepreneurs and/or the commercialization of technology or intellectual property developed at the university level.[4][5] Business cluster A business cluster is a geographic concentration of interconnected businesses, suppliers, and associated institutions in a particular field. Governments often look to clusters to stimulate innovation and entrepreneurship in their region. When clusters are applied to entrepreneurship, experts agree governments should not seek to create new clusters, but rather reinforce existing ones.[6]

[edit] References
1. ^ "How to Start an Entrepreneurial Revolution" Harvard Business Review. Retrieved June 2010. 2. ^ "Entrepreneurship: Best Business Schools" U.S. News and World Report. Retrieved 9 December, 2010. 3. ^ "Babson College Entrepreneurship Ecosystem Project Established" Retrieved 4 June, 2010. 4. ^ "The Entrepreneurship Ecosystem," MIT Technology Review. Retrieved September 2005. 5. ^ "Entrepreneurial Impact: The Role of MIT," Kauffman Foundation. Retrieved February 2009. 6. ^ "Clusters and the New Economics of Competition," Harvard Business Review. Retrieved 1 November, 1998.

Introducing the Entrepreneurship Ecosystem: Four Defining Characteristics

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This is cross-posted/adapted from an Economist blog post entitled Intelligent Evolution. As Russias Yandex makes its NASDAQ splash, Microsoft scoops up Estonias Skype for a reported $8.5 billion, Finlands Angry Birds pluck $42 million from happy venture capitalists, and Chinas RenRen rakes in $742 million in its NYSE debut, Is there method to this entrepreneurial madness? Are these random events, or can we identify, or even cultivate, the conditions in which value-creating entrepreneurial ventures like these will thrive? For years I have looked at how to foster entrepreneurship in such super-venture societies as Israel, Ireland, Taiwan, and Iceland, and worked with public and private sector leaders in over a dozen large municipalities and nations including in Spain, Chile, South Africa, Colombia, Puerto Rico, and Argentina, not to mention StartUp America. I have written in the Harvard Business Review about some of the principles and processes that drive the evolution of entrepreneurship ecosystems, but lets go back to basics: What exactly is this entrepreneurship ecosystem that is generating so much buzz these days? 1. The entrepreneurship ecosystem consists of six domains (see diagram). Actually, the entrepreneurship ecosystem consists of hundreds of specific elements that, for convenience, we group into six general domains: a conducive culture, enabling policies and leadership, availability of appropriate finance, quality human capital, venture-friendly markets for products, and a range of institutional and infrastructural supports. Our entrepreneurship ecosystem diagram shows fifty of these specific components.

2. Each entrepreneurship ecosystem is unique. Although any societys entrepreneurship ecosystem can be described using the same six domains, each ecosystem is

the result of the hundreds of elements interacting in highly complex and idiosyncratic ways. Israels entrepreneurship ecosystem evolved in the 1970s with no natural resources, military necessity, and far from markets for its products. Irelands ecosystem evolved in the 1980s in the context of free education, native English, foreign multinationals, and proximity to the European market. Taiwans entrepreneurship ecosystem evolved in the 1990s in the context of a huge accrual of highly successful Taiwanese expatriates in the US. Chinas entrepreneurship ecosystem is evolving now in the context of diverse regional policies and a somewhat (some would argue, very) totalitarian political system. 3. Specifying generic root causes of the entrepreneurship ecosystem has limited practical value. Whereas there is evidence that education, regulatory and legal frameworks, and well-functioning capital markets do indeed impact the level of entrepreneurship in a society, in general the impacts are over a long time frame, and also weak. The big step changes in entrepreneurship that we witness from time to time are the results of what statisticians call high order interactions, that is, many variables working together. In fact, a handful of individual people, sometimes one or two, can be the catalysts without which the step change would not have occurred. So whereas it is useful to assess each regional entrepreneurship ecosystem to specify causal paths at specific points in time, determining generic causal paths are less useful. Furthermore, what we often think of as outcomes can also be causes: in what I call the law of small numbers, you can often identify one or two more-or-less-random successes that are actually very causal in evolving the ecosystem. Skype impacted Estonias ecosystem, Scitex and Elscint stimulated Israels, Shockley, Fairchild, and HP helped create the Valley, Digital Equipment Corporation in Boston, and Baidu was influential in China. Success breeds success.. 4. Entrepreneurship ecosystems become (relatively) self-sustaining. Because success does breed success by feeding back to enhance the six domains of the entrepreneurship ecosystem, there is a tipping point at which government involvement can and should be significantly reduced; not eliminated, but reduced. Once the six domains are strong enough, they are mutually reinforcing, and public leaders do not have to invest quite so much to sustain them. In fact, it is critical that entrepreneurship programs are designed to be selfliquidating in order to focus on building sustainability into the environment. Nature or nurture? I am frequently asked if entrepreneurs are born or made. The same question can be applied to entrepreneurship ecosystems: Do they evolve naturally, or can we intelligently design them? I think a proper understanding of the nature of the entrepreneurship ecosystem gives us a clue: they are usually the result of intelligent evolution, a process that blends the invisible hand of markets and deliberate helping hand of public leadership that is enlightened enough to know when and how to lead as well as let go the grip in order to cultivate and ensure (relative) self-sustainability