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Entrepreneurship Ecosystems in Post-Socialist Economies
Alexander Chepurenko
Professor of Economic Sociology, [email protected]
National Research University Higher School of Economics, 101000 Myasnitskaya str., 20, Moscow, Russian Federation
Citation: Chepurenko A. (2019) Entrepreneurship Ecosystems in Post-Socialist Economies. Foresight and STI Governance, vol. 13, no 4, pp. 6-8. DOI: 10.17323/2500-2597.2019.4.6.8
The concept of entrepreneurial ecosystems (EE) is not new. In the literature on entrepreneurship, this concept was introduced by Moore in 1993 [Moore, 1993], who suggested that entrepreneurship develops through a system of relations and interaction. There are different approaches to defining EE (for more details see the paper by Chepurenko et al. in this issue).
Albeit EEs are context-dependent and have different structures, Isenberg (2011) stressed that in spite of their uniqueness, all EEs have the same core elements related to the respective groups of factors. Later, Foster et al. [Foster et al., 2013] came up with the nine pillars approach to the EE: accessible markets; human capital/ workforce; education and training; cultural support; funding and finance; regulatory framework and infrastructure; legislation/policies and access to basic infrastructure; and major universities as catalysts.
Most research papers dealing with the EE are based on the empirical data of established market economies. There is still little known about the construction, design, and driving forces of EE under transition or in new EU member countries.
The present issue is trying to somehow fill in this gap. This journal edition consists of two sections dealing with two aspects of the EEs in post-socialist economies and societies: (1) Entrepreneurial Opportunities and Innovations in the Context of an Entrepreneurial Ecosystem, (2) Entrepreneurial Ecosystems and Universities in Transitional Environments.
The first section consists of three papers: "Entrepreneurial Ecosystem and the Origin of Entrepreneurial Opportunities" by Julia Trabskaja and Tonis Mets from Estonia, "The Role of Innovation in the
Entrepreneurial Ecosystem: an Analysis of Countries at Different Stages of Development" by Eva Komlosi, Balazs Pager, and Gabor Markus from Hungary, and "Improving Local Entrepreneurial Ecosystems by Supporting Foreign Investors: Factors Contributing to the Favorable Investment Climate in a Transition Setting" by Alise Mactama and Arnis Sauka (Latvia). The contributors are focusing on the interplay of the EE and the entrepreneurial opportunity as another important matter of the contemporary entrepreneurship theory [Shane, Venkataraman, 2000]. To date, only the first steps have been made in the exploration of the relationship between entrepreneurial opportunity and the EE. Both should be seen as dynamic developments rather than something static, but how does one explain the connection between the evolution of a given EE and the developmental trajectory of entrepreneurial opportunities there? The paper by Trabskaja and Mets seeks to investigate this question, developing their own understanding of the interaction between the developmental trajectories of the opportunity and of the EE. Namely, the authors are studying the situation based on the example of the ICT sector as one of the fastest growing spheres, which supports the significant number of start-ups in an advanced economy. They explore the role of the EE in the identification of entrepreneur-ship opportunities and their realization by Estonian IT firms.
The paper by Eva Komlosi, Balazs Pager and Gabor Markus focuses on the crucial factors of entrepreneurial performance of countries based on the concept of the Global Entrepreneurship Index (GEI), which is an appropriate instrument for measuring the quality of national and regional EEs and comparing the strong and weak aspects of the related EEs [Acs et
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Chepurenko A., pp. 6-8
al., 2014]. When calculating the GEI, the authors apply the so-called Penalty for Bottleneck algorithm to provide a systemic assessment of the EE in the respective country. The paper concludes that the quality of the entrepreneurial ecosystem reflects the level of economic development. Generally, the scores of these countries are significantly below the potential performance determined by level of economic development. According to the GEI scores, only Baltic countries and some Central European countries (Slovenia, Czech Republic and Slovakia) demonstrate the successful development of their EEs.
Furthermore, in general the innovation-related aspects have an important role within the entrepreneurial ecosystem. However, some countries like China, Turkey, or India show higher score values in these innovation-related pillars of the GEI than could be expected based on their position within the GEI. Hence, these countries with a strong role played by state-financed R&D might have a relatively good performance in research and development, but the entrepreneurial components of their EE are too weak to enable high performance.
The role of foreign direct investment (FDI) in shaping the market economy and strengthening its actors in transition economies, especially in smaller countries, was very important, and thus FDI became an important driver for the local EEs. The paper by Alise Mactama and Arnis Sauka seeks to explore foreign investors' satisfaction with the factors that should contribute to the development of local businesses as well as those that generate further foreign investment flow. The paper is based upon a series of mini case studies with the managers of key FDI companies in Latvia in 2015-2018.
The authors focus on the perception by foreign investors of such factors as the quality of the labor force, efficiency of the public sector and tax regimes as well as unfair behavior, the availability of labor, and risks of uncertainty. Their paper shows that the Latvian EE made progress in most of the related issues during the period of 2015-2018, however, in such areas as demography, the availability of a skilled work force, unfair behavior of counterparts, and the effectiveness of public sector, it was relatively low. The authors make a contribution to developing a customized and well-targeted policy for improving the investment climate as an inevitable part of the local EE in the transition setting of Latvia.
The second part of the special issue starts with the paper "Universities' Role in Regional Entrepreneurial Ecosystems in Russia: the Need for a Historically-Driven Institutional Approach" by Alexander Chepurenko, Maria Kristalova, and Michael Wyrwich. It focuses on the importance of EE for the emergence of new ventures. It belongs to the common view that now institutions play a key role within ecosystems.
However, the historical roots and origins of the key institutions are still not adequately represented in the current literature. Moreover, most of the literature focuses on Western countries while the specifics of developing and transitional economies are still less investigated. This paper traces some steps at developing what the authors call "a historically-driven institutional approach to entrepreneurial ecosystems" in the transitional context. Specifically, they stress the role of local universities in the transition regions, particularly Russia. From a methodological point of view, the paper seeks to observe how historical trajectories influence the present state of the underlying framework conditions and shape the specifics of the EE in transition.
This paper emphasizes the role of factors relating to path dependence (such as the socialist mental and in-frastructural legacy) as well as the specific institutional setting which emerged during the transition itself and is moderating the interplay between universities and other local actors in EE (actors and institutions) there. This helps one understand whether and how universities in such transitional EEs can promote entrepreneurial activities and become actors of socioeconomic development.
The establishment of entrepreneurial courses and educational platforms play a key role in the local universities' transition towards entrepreneurial education and therefore in the development of local EEs. Two papers in this issue are devoted to this theme. The exploratory study by Marina Z. Solesvik and Paul Westhead entitled "The Fostering of Entrepreneurship Competencies and Entrepreneurial Intention in a Weak Ecosystem: Exploratory Study of Business and Engineering Students in Ukraine" explores whether students drawn from a supportive entrepreneurial education reported a higher intensity of entrepreneurial intention (IOEI) than students that did not participate in any forms of the entrepreneurial education. Further, it explores what specific competencies improved within the context of a supportive entrepreneurial education were associated with students reporting high IOEI. Guided by the competency theory, based on a sample of 125 business students engaged in entrepreneurial education, and 64 engineering students that had never participated in entrepreneurial education, the authors found that business students drawn from a supportive entrepreneurial education showed significantly higher IOEI. However, of the 13 competencies honed by entrepreneurship only three competencies (i.e., the ability to identify high quality opportunities, computer literacy, and networking) were weakly significantly associated with higher IOEI. This might be the result of the importance of modern approaches to entrepreneurial education developed in favorable EEs of Western economies, while the weak and fragile EEs of some former Soviet republics do not support entrepreneurial education in the attempt to establish
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or grow new businesses. Sure, this pioneering study of students in the Ukraine does not provide conclusive evidence for the government to more proactively support entrepreneurial education with regard to its current content and delivery. Hence, additional research in several former Soviet contexts is needed to provide a rigorous evidence base to guide the development of entrepreneurial education in universities.
The concluding paper "Entrepreneurial Ecosystems of Russian Universities: Role, Challenges, and Development Opportunities for Entrepreneurial Education" by Margarita Zobnina, Anatoly Korotkov, and Aleksandr Rozhkov explores the development of entrepreneurial education in the context of what they define as an "University Entrepreneurial Ecosystem" (UEE) at 21 Russian universities. In particular, the authors focus on the role of these tracks in the development of entrepreneurial mindsets and skillsets, the commercialization of technologies, and the promotion of new venture launches.
The authors observe the UEE formation at different development stages while showing the role of entrepreneurial courses in UEEs. They combine a general analysis with four case studies of different Russian
universities. They conclude that the implementation of entrepreneurial courses fosters the development of the UEE, with all the elements of an UEE then centering on the entrepreneurial education. As the related course impresses an entrepreneurial mindset and related skills upon students, it attracts also entrepreneurs and business angels as mentors and thus leads to the shaping of a network. To support it, institutions like incubators and accelerators are either established from scratch or already existing ones start assisting student business start-ups.
Furthermore, the case analysis suggests that the professors' lack of entrepreneurial experience, as well as the course format (e.g. elective or compulsory) might hamper the successful launch and development of UEE. But in case of an evolving UEE, professors' skills can be complemented through other ecosystem actors. It is also obvious that some universities diminish the impact of the entrepreneurial education upon the establishment of an UEE through the inconsistent development of infrastructure or by implementing a purely formal entrepreneurial course. The introduction of entrepreneurial courses does influence the efficiency of these other institutions, even if these courses are not necessarily the starting point of the UEE formation.
References
Foster G., Shimizu C., Ciesinski S., Davila A., Zahoor Hassan S., Jia N., Plunkett S., Pinelli M., Cunningham J., Hiscock-Croft R., McLenithan M., Rottenberg L., Morris R., Lee D. (2013) Entrepreneurial Ecosystems Around the Globe and Company Growth Dynamics, Geneva: World Economic Forum.
Isenberg D. (2011) The entrepreneurship ecosystem strategy as a new paradigm for economy policy: Principles for cultivating entrepreneurship, Babson Entrepreneurship Ecosystem Project, Babson Park, MA: Babson College.
Moore J.F. (1993) Predators and prey: A new ecology of competition. Harvard Business Review, vol. 71, no 3, pp. 75-86.
Shane S., Venkataraman S. (2000) The Promise of Entrepreneurship as a Field of Research. The Academy of Management Review, vol. 25, no 1, pp. 217-226.
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