Entrepreneurial Ecosystems and Growth Oriented Entrepreneurship

Increasing the number of high growth firms (HGFs) is now a major focus for industry policy in developed countries. However, existing approaches are proving ineffective. Simply creating supportive framework conditions is insufficient. Creating favourable environments for business start-ups is not leading to the creation of more HGFs. And transactional forms of support for HGFs (e.g. financial assistance) are proving to have limited effectiveness, at least post-start-up. The entrepreneurship ecosystem approach has emerged as a response. It recognises that HGFs flourish in distinctive types of supportive environment. Distinguishing features of entrepreneurial ecosystems include the following: a core of large established businesses, including some that have been entrepreneur-led (entrepreneurial blockbusters); entrepreneurial recycling – whereby successful cashed out entrepreneurs reinvest their time, money and expertise in supporting new entrepreneurial activity; and an information-rich environment in which this information is both accessible and shared. A key player in this context is the deal-maker who is involved in a fiduciary capacity in several entrepreneurial ventures. Other important aspects of an entrepreneurial ecosystem include its culture, the availability of start-up and growth capital, the presence of large firms, universities and service providers. However, studies have tended to take a static approach to the study of entrepreneurial ecosystems, largely ignoring both their origins and stimulus and also the processes by which they become self-sustaining. Creating entrepreneurial ecosystems poses various challenges for policy-makers. There are several general principles that need to be followed. Policy intervention needs to take a holistic approach, focusing on the following: the entrepreneurial actors within the ecosystem; the resource providers within the ecosystem; entrepreneurial connectors within the ecosystem and the entrepreneurial environment of the ecosystem. Finally, it is important that policy-makers develop metrics in order to determine the strengths and weaknesses of individual ecosystems so that their strengths and weaknesses can be assessed, to identify whether and how to intervene, and monitor over time the effectiveness of such interventions. What to measure, approaches to measurement and access to data at the appropriate geographical scales all pose formidable challenges.