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Levels of necessity of entrepreneurial ecosystems elements

Author

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  • Pedro Torres

    (University of Coimbra)

  • Pedro Godinho

    (University of Coimbra)

Abstract

The literature emphasizes that interactions between biotic (the individual) and abiotic entities (the institutional environment) are central to entrepreneurial ecosystems. However, despite the importance of digital entrepreneurial ecosystem (DEE) elements, it might be questioned if all elements are equally necessary. Furthermore, different outputs might require different conditions. The same can happen with different levels of a given output. The answer to these questions is of particular concern from a policy perspective. By using necessary condition analysis (NCA) alongside with fuzzy-set qualitative comparative analysis (fs/QCA), this study advances understanding of the entrepreneurial ecosystems. While fs/QCA identifies only one necessary condition to produce digitally-enabled unicorns – market conditions – and none to unicorns and new business creation, NCA shows that all elements of DEE are necessary to produce digitally-enabled unicorns, and most of them are also necessary for producing unicorns. NCA also identifies formal institutions, regulations, and taxation and finance as necessary conditions for new business creation. Moreover, NCA shows that necessary conditions do not have the same degree of importance, and the necessity of a given condition does not automatically imply its highest level is required. For researchers, these results emphasize the importance of using NCA as a complement of fs/QCA. For practitioners, these findings can be used to optimize the allocation of policy resources, particularly targeting the elements that constitute bottlenecks. Plain English Summary Policymakers should target different levels of entrepreneurial ecosystem pillars performance to produce unicorns. Ambitious entrepreneurship is important for country competitiveness in the digital age. Digital entrepreneurial ecosystems can facilitate the rise of digitally-enabled unicorns, an extreme case of ambitious entrepreneurship. This study shows which conditions are necessary to produce this output; these conditions can be required at different levels. The comparison of country’s performance on each condition shows which of them constitute bottlenecks. Although all elements of digital entrepreneurial ecosystems are relevant for digitally-enabled unicorns, policymakers should target the ones that constrain the emergence of this output. This study identifies the levels that should be reached in each condition, not only for digitally-enabled unicorns, but also for unicorns in general. The results show relevant differences between the levels needed for these outputs. For example, knowledge creation and dissemination seem to be more important to boost digitally-enabled unicorns rather than unicorns in general. Thus, policymakers should consider specific levels of the conditions to optimize resource allocation.

Suggested Citation

  • Pedro Torres & Pedro Godinho, 2022. "Levels of necessity of entrepreneurial ecosystems elements," Small Business Economics, Springer, vol. 59(1), pages 29-45, June.
    • Handle: RePEc:kap:sbusec:v:59:y:2022:i:1:d:10.1007_s11187-021-00515-3
    DOI: 10.1007/s11187-021-00515-3
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    4. Ravi Roshan & Krishna Chandra Balodi & Sagnika Datta & Anil Kumar & Arvind Upadhyay, 2024. "Circular economy startups and digital entrepreneurial ecosystems," Business Strategy and the Environment, Wiley Blackwell, vol. 33(5), pages 4843-4860, July.
    5. Jan Dul & Sven Hauff & Ricarda B. Bouncken, 2023. "Necessary condition analysis (NCA): review of research topics and guidelines for good practice," Review of Managerial Science, Springer, vol. 17(2), pages 683-714, February.
    6. Fossen, Frank M. & McLemore, Trevor & Sorgner, Alina, 2024. "Artificial Intelligence and Entrepreneurship," IZA Discussion Papers 17055, Institute of Labor Economics (IZA).
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