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The authors discuss economic development policy facing the burgeoning entrepreneurial ecosystem research. They aim to answer four questions. First, how are entrepreneurial ecosystems different from regional innovation systems and clusters, two related frameworks that had been vastly popular among economic development policy makers prior to the rise of entrepreneurial ecosystems? Second, what are the key findings in the entrepreneurial ecosystem research that can guide economic development policy making? Third, how should economic development policy be adjusted under the entrepreneurial ecosystem approach? Finally, what does the ongoing debate on the geographical boundaries of entrepreneurial ecosystems mean for economic development policy?

The emergence of digital technologies has significantly reduced the economic costs of data—search, storage, computation, transmission—and enabled new economic activities. Over the years, firms able to create a platform-based ecosystem have become a force of “creative construction.” Economic activities (C2C, B2C, B2B) have been reorganized around platform-based ecosystems for value creation and value appropriation, which are orchestrated by multisided platforms via the “digital hand.” To further understanding of the Digital Platform Economy, this paper provides a conceptual framework consisting of three interrelated concepts: digital technology infrastructure, multisided digital platforms, and platform-based ecosystems (users and entrepreneurs). Using a unique database over five decades, we revisit the hypothesis that new firms were needed to introduce digital technologies. Some years, like some poets and politicians, are singled out for fame far beyond the common lot and 1971 was clearly such a year. One of the events of 1971 was the inventions of the microprocessor, a computer on a chip. This invention led to the creation of the personal computer, the internet, the smart phone, and cloud computing. Over the past 50 years, economic activities have been reorganized from large bureaucratic firms to a more networked form of organization for creating value for consumers and making money for companies. To further our understanding of this digital revolution, we provide a framework consisting of three interrelated concepts: digital technology infrastructure, multi-sided digital platforms, and platform-based ecosystems. Using a unique database over five decades, we test the hypothesis that new firms were needed to introduce digital technologies. Countries that did not promote new firms fell behind in adopting the new technologies.

During the COVID-19 pandemic, many firms began operating in a working-from-home environment (WFH). This study focuses on the relationship between WFH and small business performance during the pandemic. We built a theoretical framework based on firm profit maximization, compiled an up-to-date (March through November) real-time daily and weekly multifaceted data set, and empirically estimated fixed-effect panel data, fractional logit, and multilevel mixed effects models to test our hypotheses. We find that in states with higher WFH rates, small businesses performed better overall with industry variations, controlling for the local pandemic, economic, demographic, and policy factors. We also find that WFH rates increased even after stay-at-home orders (SHOs) were rescinded. With the ready technology and practice of WFH in the pandemic, our robust empirics confirm our theory and hypotheses and demonstrate WFH as a potential force that may expedite “creative destruction” instance and permanently impact industrial structure and peoples’ work lives. Plain English summary The Rise of Working from Home (WFH) as a Silver Lining and “Creative Destruction” in the Pandemic: WFH Helps Small Businesses Perform Better with Industry Variations and Continues to Shine after Stay-at-Home Orders Ended. This study focuses on the role of working from home (WFH) for small business performance during the COVID-19 pandemic. We built a theoretical framework based on firm profit maximization and identified WFH as a rational business choice. We then compiled a real-time multifaceted data set, estimated panel fixed-effect, fractional logit, and multilevel mixed effects models, and find that (1) small businesses in states with higher WFH rates performed better with industry variations, controlling for local pandemic and socioeconomic factors; and (2) WFH rates increased after stay-at-home orders were rescinded. Our study demonstrates WFH as a potential “creative destruction” force that may expedite our technologically ready WFH adoption and permanently impact industrial structure and peoples’ work lives.

We evaluate the main characteristics of the digital ecosystem of North American (USA and Canada) and 16 Latin American economies for 2019. By employing the ‘benefit of the doubt’ model rooted in non-parametric techniques to scrutinize a composite indicator designed to assess the digital ecosystem (i.e., the Digital Platform Economy (DPE) index), the analysis allows the computation of endogenous (country-specific) weights that can be used for developing more informed policy making. The results show that countries prioritize different aspects of their digital ecosystem which confirms that, contrary to homogeneous prescription, tailor-made policy is a more desirable approach if the objective is to optimize the resources deployed to enhance the countries’ digital ecosystem. Resumen Este estudio evalúa las principales características del ecosistema digital en América del Norte (EE.UU. y Canadá) y en 16 economías Latinoamericanas para 2019. Al aplicar el modelo del ‘beneficio de la duda’ originado en técnicas no paramétricas, el análisis propuesto del indicador diseñado para valorar el ecosistema digital (esto es, Digital Platform Ecosystem, DPE) permite el cálculo de pesos endógenos (específicos para cada país) que se pueden utilizar para desarrollar políticas más informadas. Los resultados muestran que los países priorizan diferentes aspectos de su ecosistema digital, lo que confirma que, contrariamente a la prescripción homogénea, el diseño de políticas específicas ajustadas al entorno local es un enfoque más deseable si el objetivo es optimizar los recursos desplegados para mejorar el ecosistema digital.

The application of big data, new algorithms, and cloud computing is creating a digital platform economy (DPE) built around platform organizations and their platform-based ecosystem. We use the DPE Index to examine Europe’s digital efficiency across countries and explain its global position by analyzing Brexit and the electric vehicle industry. We argue that the United Kingdom left the European Union because E.U. regulations were holding back the U.K.’s strong DPE and that a weak DPE is holding German back from being a leader in the electric vehicle industry. The problem for Europe’s DPE is that the entrepreneurial state is strong and the private sector is weak.

We employ the ‘benefit of the doubt’ approach rooted in non-parametric techniques to evaluate the entrepreneurial ecosystem of 71 countries for the period 2016. By scrutinizing the relative efficiency of countries’ entrepreneurial ecosystems, the proposed analysis of composite indicators allows the computation of endogenous (country-specific) weights that can be used for developing more informed policy making. The results show that countries prioritize different aspects of their national system of entrepreneurship which confirms that, contrary to homogeneous prescription, tailor-made policy is necessary if the objective is to optimize the resources deployed to enhance the countries’ entrepreneurial ecosystem. The findings of the empirical application reveal significant improvements in the quality of the entrepreneurial ecosystem can be realized by targeting the policy priorities of the local entrepreneurship system identified by the ‘benefit of the doubt’ weights. By analyzing the variation in economic and entrepreneurship outcomes over the seven-year period centered on the study year (period 2013–2019), we found a significant positive correlation between quality improvements in the entrepreneurial ecosystem and venture capital investments.

This study employs the “Benefit of the Doubt” method rooted in non-parametric techniques to evaluate the digital ecosystem of 116 countries for the year 2019. By scrutinizing the relative efficiency of countries’ digital ecosystem based on the Digital Platform Economy index (DPE index), the proposed analysis of composite indicators allows the computation of endogenous (country-specific) weights that can be used for developing a more informed policy. The results show that countries prioritize different aspects of their digital ecosystem. Additionally, the findings reveal significant differences in the configuration of the digital ecosystem around the world. These results confirm that, contrary to homogeneous prescription, tailor-made policy is necessary if the objective is to optimize the resources deployed to enhance the digital ecosystem.

We show how the type of alcohol consumed is related to the type of entrepreneurship present for economies in Europe. We differentiate between beer-, wine-, and spirit-drinking countries and distinguish between productive, unproductive, and destructive entrepreneurship. The underlying links do not emerge from drinking per se but rather the drinking habits and taste for beverage types capture deep cultural features and cultural similarities amongst the countries. Societies that prefer to drink beer are closer to each other culturally than those which prefer drinking wine or spirits. Therefore, the taste for alcohol type is merely an instrument in explaining cultural and institutional differences across entrepreneurship. Broadly speaking, beer-drinking countries are characterized by higher shares of productive entrepreneurship, wine-drinking countries with unproductive entrepreneurship, and spirit-drinking countries with destructive entrepreneurship. We discuss mechanisms in which the results are found and highlight a new research agenda, emphasizing the potential role of epigenetics.

This study for the first time addresses generation effects on eight entrepreneur types across four U.S. generations: Traditionalists, Boomers, Gen‐Xers, and Millennials. It adopts hierarchical age‐period‐cohort (HAPC) models using multilevel mixed‐effects logistic regression models with random period effect controls and the same‐age comparison between two neighboring generations. The empirical study relies on monthly Current Population Survey data across 11 years (2006–2016). When controlling for age, period, path dependency, seasonality, and other demographic and socioeconomic factors, no generational differences are identified for workers' entrepreneur propensity, mirroring entrepreneurs' misfits; for entrepreneur‐type propensities, limited generation differences are identified: the odds for Gen‐Xers to be novice (vs. non‐novice ) entrepreneurs are 10% higher than Boomers for the ages of 44 and 51; the odds for Boomers to be opportunity (vs. necessity ) entrepreneurs are 2.3 times higher than Traditionalists for the ages 63–70. The limited generational difference is consistent with prior literature using HAPC.

While work from home (WFH) becomes the new norm in the COVID-19 pandemic and while small businesses could be more vulnerable in crisis, whether the WFH norm will fade after the stay-at-home mandate ended and whether WFH could be a Schumpeterian “creative” force that helps small businesses do well in the pandemic is unknown. The study first builds a theoretical framework based on marginal revenue product cost utility theory subject to a “contagion” agglomeration parameter and argues that WFH is a rational choice for businesses. Then, we compiled from multiple data sources an up-to-date real-time daily and weekly multifaceted data set tracking WFH propensity from March 20 through July 28. Our empirical analysis estimated a variety of fixed-effects panel data models, population-averaged generalized linear panel-data models with the generalized estimating equation (GEE) approach, and two-level mixed-effects panel-data models. After controlling for the local pandemic, economic, and demographic factors, we find (1) after the stay-at-home order ended, WFH rate got higher; (2) small businesses in states with higher WFH rate are more likely to have higher increases in operating revenue, better cash flow and lower chances of temporary closure. Our robust empirics confirm our theories and hypotheses and demonstrate WFH as a potential force that expedited the “creative destruction” into a new efficient work paradigm.

This paper demonstrates how the Regional Entrepreneurship and Development Index (REDI) can be used to optimize local entrepreneurial discovery processes, in a manner which can support smart specialization strategies (S3). While S3 industry prioritization is based on the identification of local strengths, regional improvement can be achieved by improving the weakest features of the local entrepreneurial ecosystem. REDI based suggestions are place‐based and offer rationale for tailor‐made regional policy interventions. We found that without optimizing the entrepreneurial ecosystem, the industry specialization alone may not be successful because of the inability of the ecosystem to nurture high growth ventures. Este articulo demuestra que el Indice de Desarrollo e Iniciativa Empresarial Regional (IDIE) se puede utilizar para optimizar los procesos de descubrimiento de iniciativas empresariales locales, de manera que pueda servir de apoyo a las estrategias de especializacion inteligentes (S3, por sus siglas en ingles). Si bien la priorizacion de industrias de las S3 se basa en la identificacion de las fortalezas locales, la mejora regional se puede lograr mejorando las caracteristicas mas debiles del ecosistema local de iniciativas empresariales. Las sugerencias basadas en el IDIE estan ligadas a cada lugar y ofrecen una justificacion para realizar intervenciones formuladas a medida para las politicas regionales. Se descubrio que si no se optimiza el ecosistema de iniciativas empresariales, la especializacion de la industria por si sola puede no tener exito, debido a la incapacidad del ecosistema para fomentar empresas de alto crecimiento. 本稿では、スマート・スペシャリゼーション戦略(smart specialization strategies:S3)を支持する方法で、地域の起業家的発見のプロセスを最適化するために、Regional Entrepreneurship and Development Index (REDI:地域のアントレプレナーシップと発展の指数)をどのように利用することができるかを例示する。S3は地域の強みを特定することにより産業の優先順位付けを行っているものの、地域の改善は、地域の起業エコシステムの最たる弱点を改善して達成できるものである。REDIに基づく提案は、地域ベースのものであり、地域個別の地域政策の介入の根拠を提示するものである。エコシステムには急成長ベンチャーを育成する能力がないため、起業エコシステムの最適化なくしては、産業特化は成功しない可能性があると考えられる。

During the COVID-19 pandemic many firms began operating in a working-from-home environment (WFH). This study focuses on the relationship between WFH and small business performance during the pandemic. We built a theoretical framework based on firm profit maximization, compiled an up-to-date (March through November) real-time daily and weekly multifaceted data set, and empirically estimated fixed-effect panel data, fractional logit, and multilevel mixed effects models to test our hypotheses. We find that in states with higher WFH rates, small businesses performed better overall with industry variations, controlling for the local pandemic, economic, demographic and policy factors. We also find that WFH rates increased even after stay-at-home orders (SHOs) were rescinded. With the ready technology and practice of WFH in the pandemic, our robust empirics confirm our theory and hypotheses and demonstrate WFH as a potential force that may expedite “creative destruction” instance and permanently impact industrial structure and peoples’ work lives.

This study extends the current occupational choice literature on age and entrepreneurship to eight different types of US boomer entrepreneurs. The empirical study relies on monthly Current Population Survey data across 11 years (2006–16). Multilevel mixed-effects logistic regression models are estimated to incorporate individual- and metropolitan-level effects. Among boomer entrepreneurs, we find that novice (versus non-novice) and opportunity (versus necessity) entrepreneur rates rise at higher ages (above 60).

The literature on the relationship between age and entrepreneurship has been inconclusive. This study for the first time examines this relationship by extending the occupational choice literature to eight entrepreneur types and four generational modification effects in the USA. Multilevel mixed-effect logistic regression models are estimated to examine the age effects in entrepreneur type propensities. Generational modification effects are compared for the same ages across neighboring generations by hierarchical age-period-cohort (HAPC) models. We find that entrepreneurial propensity rises with age until around 80. The propensity of novice (versus non-novice) and unincorporated (versus incorporated) entrepreneurs has a U-shaped age trend dipping around age 60, while the propensity of full-time (versus part-time) declines since age 30s. The propensity of incorporated (versus unincorporated) entrepreneurs declines from ages 44 to 51 for Gen-Xers, but not for Boomers; this propensity also declines faster for Boomers than for Traditionalists from ages 63 to 70.

We analyze conceptually and in an empirical counterpart the relationship between economic growth, factor inputs, institutions, and entrepreneurship. In particular, we investigate whether entrepreneurship and institutions, in combination in an ecosystem, can be viewed as a “missing link” in an aggregate production function analysis of cross-country differences in economic growth. To do this, we build on the concept of National Systems of Entrepreneurship (NSE) as resource allocation systems that combine institutions and human agency into an interdependent system of complementarities. We explore the empirical relevance of these ideas using data from a representative global survey and institutional sources for 46 countries over the period 2002–2011. We find support for the role of the entrepreneurial ecosystem in economic growth.

This paper employs Frederick Jackson Turner’s Frontier Thesis of American democracy to construct a framework for understanding the U.S. university campus as an entrepreneurial ecosystem. One question that immediately comes to mind when studying ecosystem performance is what the proper unit of analysis is: the country, the state, the city, the region, or something smaller, like an incubator or accelerator? This paper suggests that the open, innovative American frontier that closed at the end of the twentieth century has reemerged in the entrepreneurial economy on the U.S. campus. The contemporary campus entrepreneurial ecosystem offers the characteristics of Turner’s frontier: available assets, liberty, and diversity while creating opportunity, and fostering entrepreneurship and innovation. A case study of the University of Chicago explores governance of the campus as an entrepreneurial ecosystem and the output produced by that campus ecosystem.

The author of this chapter, Zoltan Acs, is one of the people who has known David the longest and knows him well. Although they had very different backgrounds and took very different paths, their career arcs led them to meet and become colleagues in Berlin in the 80’s and they have been close friends ever since, with Acs even serving as the best man in David’s wedding. This essay tells their story.

Correction to: Small Bus Econ (2020) 55:153–178

The perhaps broadest approach to economic performance at the level of a country is the concept of national systems of innovation. Despite the emergence of a compelling literature identifying the persistence of innovative activities and country specific institutional effects, evidence on the nature of national systems of innovation is still missing and a number of crucial questions and answers remain unanswered. To shed light on these issues, as of leading scholars of entrepreneurship and innovation was assembled from around the world for a conference on “National Systems of Entrepreneurship and Innovation” at the ZEW Mannheim in November 2014. This article draws on the NSI framework, sets it in a larger context, examines the logic of the approach and introduces the special issue by summarizing the papers presented at the conference and selected for this special issue.

Motivated by differences in new-firm survival across regions, this paper explores the impact of regional human capital on new-firm survival rates. New-firm survival is interpreted through formation rates of surviving versus closed firms in the service sector. By incorporating knowledge spillovers through a geographical variation model for Labour Market Areas, we empirically test the relationship between regional human capital stocks and new-firm survival. The expected positive relationship between regional human capital and new-firm survival is supported for the period 1993–1995, but is not as strong for the recession period 1990–1992. Controlling for human capital, the new-firm survival rate is negatively related to service sector specialisation and positively related to all-industry intensity, suggesting that city size and diversity may be an important determinant of new-firm survival in both periods. Abstract. Motivado por las diferencias entre economias regionales en la supervivencia de nuevas empresas, este articulo explora el impacto del capital humano regional en las tasas de supervivencia de nuevas empresas. La supervivencia de nuevas empresas se interpreta a traves de las tasas de formacion de empresas supervivientes respecto de empresas que han cerrado en el sector servicios. Mediante la incorporacion de spillovers (efectos derrame) de conocimiento en un modelo de variacion geografica para Areas de Mercado Laboral, analizamos empiricamente la relacion entre reservas de capital humano y la supervivencia de nuevas empresas. La esperada relacion positiva entre el capital humano regional y la supervivencia de nuevas empresas es valida para el periodo 1993-1995, pero no lo es tanto para el periodo de recesion 1990-1992. Controlando la variable capital humano, la tasa de supervivencia de nuevas empresas esta relacionada negativamente con la especializacion del sector servicios y positivamente relacionada a la intensidad del total de industrias, sugiriendo que el tamano de la ciudad y la diversidad podria ser un factor determinante de la supervivencia de nuevas empresas en ambos periodos.

This paper uses an interpretive analysis to exam past and present developments in knowledge commercialization and provide researchers, policy makers, and university leaders an alternative framework. The model is based on historical precedent, and current economic realities, for effectively commercializing knowledge in the entrepreneurial age. While traditional technology transfer focused on an organizational centric approach, we propose an individual centric model of technology commercialization from universities. The move from an organization centric model to an individual centric model will likely follow past eras of change and innovation in higher education. The challenge for regional and university leadership is clear. Find methods and models for unleashing the knowledge across campus to solve local and regional challenges.

This article explores the relationship between knowledge creation, entrepreneurship, and economic growth in the United States over the last 150 years. Distinguishing between general knowledge and economically useful knowledge, we examine the changes over time in the locus and content of new knowledge creation: the role of universities, particularly engineering schools and land-grant universities, industrial laboratories, and corporate research and development (R&D) laboratories prior to World War II. The practical orientation of US academic R&D and the close research interaction between academia and industry are noted. We study the unprecedented increase in R&D spending in the United States during and after World War II and how it was converted into economic activity via incumbent firms in the early postwar period and increasingly via new ventures in the last few decades. Copyright 2009 The Author 2009. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

We develop an endogenous-growth model in which we distinguish between inventors and innovators. This distinction implies that stronger protection of intellectual property rights has an inverted U-shaped effect on economic growth. Intellectual property rights protection attributes part of the rents of commercial exploitation to the inventor that would otherwise accrue to the entrepreneur. Stronger patent protection will therefore increase the incentive to do research and development (R&D) and generate new knowledge. This new knowledge has a positive effect on entrepreneurship, innovation, and growth. However, after some point, further strengthening of patent protection will reduce the returns to entrepreneurship sufficiently to reduce the overall growth rate.

This article reports the results of a national survey that estimates the rate of immigrant entrepreneurship in a representative sample of high-impact firms in high-technology industries in the United States. The authors report key descriptive statistics about the companies and their founders. About 16% of the companies in the sample, for instance, number at least one immigrant entrepreneur among their founding teams, while about 77% of the immigrant entrepreneurs are U.S. citizens. Three multivariate analyses are carried out that compare high-impact, high-tech firms that count at least one immigrant in their founding teams with those that were founded by native-born entrepreneurs. It is found that the two groups of firms are similar with respect to economic and technological performance. Immigrant-founded firms are more likely to report that they have a strategic relationship with a foreign firm. The authors conclude by briefly considering the potential implications of their findings for immigration and economic development policy.