Entrepreneurial Ecosystems

Positive and Normative Insights from the Netherlands

OECD Workshop, 7 November 2013, The Hague

Meijaard, Brouwer and Van der Veen

Overview

• Macro-Meso-Micro: Collecting Data on 3 Levels

• Legitimacy of Policies• Empirical Study• Case Study• Discussion

Macro

Benchmarking ‘Framework Conditions’

Insight into causalities and leverage

Determinants of fast-growth firm

levels

Short term:Income tax

Access to Finance

Long term:Attitudes towards entrepreneurship

Smaller government

Determinants of fast-growth firm

dynamics

Short term:Exit and Entry

burdensFlexibility of labour

Long term:R&D collaboration

Smaller government

Meso

Insights into Regional, Sectoral and Value Chain Ecosystems

Micro

Benchmarking on a Local Level (Survey Stratifications)

WEF Stanford Team, 2013

But then, if one knows things well: What to do?

• By and large:Entrepreneurs should make ‘unbiased’ decisions

• Intervene: Only if market failure and/or welfare losses

– Externalities & Spill-overs: too low levels of activity– Network effects– Information Asymmetries: Growth barriers– Natural monopolies– Public goods

Empirical study

Networks and firm boundaries

Empirical study of networks

• What can we say about the relationship between networks, transaction costs and business growth?

• What is the role of the government?• Interviews with different stakeholders:

companies, municipalities, business networks, triple helix networks, chamber of commerce etc. Focus on companies.

• Internet survey among business owners

Network as public good?

• A network is a semi public good: non-rivalrous, but excludable• Network effects themselves are not a public good: Only

participants of network benefit • Degree of organization of a sector can be low due to complex

externalities (free rider effects)• Information exchange between actors => knowledge

development, due to learning and inspiration• Knowledge creation is a positive externality• Policy: facilitate creation of networks for knowledge

devemopment• Other topics?

Findings empirical research

• Network is our capital (Y = ANLK )• Business networks evolve with the growth of companies

– Startups -> encouter people (hence, business networks)– Early growth and market growth -> cooperation much more important

• Cooperation: to develop knowledge, to innovate. Also, to increase the market (e.g. hubs for transport). To increase market power (e.g. FloraHolland)

• Complex externalities, due to many actors, could lead to underdevelopment of networks

• Clustereffects: due to many ties, many places to encouter etc. companies work together more often: solve problems, exploit opportunities

Triple Helix

• Triple Helix cooperation: – Structure and organization important– Vision should be developed in close cooperation with

companies, bottum up– Put resonsibilties where they belong– Qualities of people, experience not neccesarily good,

comes to people management, inspiration, bringing people together etc.

– Specific implementation agenda, what are we going to do?– This way companies see the real value of cooperation with

govenment and knowledge institutions

Policy Recommendations

• Stimulate the creation of networks to create knowledge development (through networks), the market should be in the lead

• When there are complex externalities, increase the level of organization in a sector. It wil also lead to increased cooperation on different fields

• Simply increase visibility of the government in networks, this is mutually beneficial

• Trade missions are highly valued to enter foreign markets, incoming trade mission should be improved

Case Study

Co-evolution

LED-ecosystem In a business ecosystem companies co-evolve capabilities around a new

innovation, work cooperatively and competitively (co-opetition) to support new products, satisfy customer needs, and eventually incorporate the next round of

innovations*.

*Moore, 1993, Predators and prey: A New Ecology of Competition, Adner & Kapoor, 2010, Value creation in innovation ecosystem

The Dutch LED lighting – ecosystem: ± 260 SME’s (high-tech/ICT), some large firms, knowledge and public institutions• Goal: share knowledge around fast developments in LED lighting amongst companies that develop, design, produce and sell innovative products based on LED-technology• Need: a recognizable, independent network where up-to-date knowledge about technological en market developments is available• Role government/Syntens: connect (potential) participants, inform (LEDtalks, Q&A), connect initiatives to boost an internationally recognised cluster -> Roadmap Lighting Topsector HTSM

Discussion

• What are good reasons for the government to initiate specific business networks?

• Which conditions should be ‘managed’ in relation to the entrepreneurial ecosystem– Short run (to correct e.g. deadweight growth barriers)– Long run (i.e. to correct market failure)

• In which other fields than knowledge development should governments stimulate the creation of networks?