Developing Entrepreneurship Ecosystems By Design: Can Academic Institutions Play A Central Role? Universities provide an ideal platform with free thinking, creative culture for product and business ideas to germinate

Keeping in mind the societal and economic impact of entrepreneurial activities, discussions on understanding, nurturing and contributing to entrepreneurial ecosystem is gaining significance. Entrepreneurial ecosystems such as Silicon Valley, Edinburgh and Tel Aviv are widely known for their economic contributions as they are believed to have systematically enhanced creation and sustenance of entrepreneurial activities. Compared to traditional entrepreneurial approach, innovation-focused entrepreneurship follows an outside-in approach where ventures integrate knowledge, capabilities and resources from external sources to make bigger and rapid impact. For today's science and technology driven entrepreneurial ventures, ecosystems, thus, play a critical role.

Entrepreneurial ecosystem, as an idea proposed by Daniel Isenberg in 2010, is often understood as a complex adaptive system—a constellation of connections between components of ecosystem where relationships between individual elements are non-linear and dynamic. Thus, ecosystem is a dynamic structure that is formed by interconnected, interdependent organizations which could be the new ventures, large corporations, government, industry associations, individual investors, public sector organizations, universities and research centers. The system is complex as macro-level and micro-level interactions among individual elements influence each other.

Diagnostics to Design

Given the significance of an entrepreneurship ecosystem, for evolving economies, there is an obvious interest in knowing how to design and build the ecosystem. Many frameworks are available to assess the effectiveness of entrepreneurial ecosystems. While the World Bank Doing Business takes into consideration only two factors namely policy and infrastructure to measure how easy it is to create a company, Babson Entrepreneurship Ecosystem Project, or BEEP, takes comprehensive view to measure effectiveness of the ecosystem by taking into consideration factors such as policy, finance, infrastructure, markets, human capital, support services, culture, R&D and innovation. OECD Entrepreneurship Framework also includes macroeconomic conditions apart from what BEEP takes into considerations.

Whether simple or comprehensive, such frameworks surely help in evaluating the impact and in analysing the results of an entrepreneurial ecosystem. However, building, fostering, replicating, contributing and gaining from such an ecosystem demand much more than the diagnostic approach. In this context, what is believed to be crucial are the interconnections and interactions among the various constituents which are in diverse domains. Like communities, the ecosystem can be considered a social system where each organization involved render its expertise and benefit from others' contribution. Hence, the organizations that are most favored to facilitate the networks among diverse set of other organizations can play a pivotal role.

Academic Institutions and Entrepreneurial Ecosystem

The understanding of entrepreneurial ecosystem, thus, brings forth five key characteristics that define them – they are a) purpose-focused in the sense of making a larger impact on economy and society over a period of time; b) idea-centered meaning co-evolving around ideas and innovations; c) knowledge-driven with science and technology and their commercialization to solve problems; d) dynamic and hence experimental; and e) systemic with interdependent relationships, where strong, ongoing connections and communications within networks play important role.

If these characteristics define them, among several organizations that belong to the ecosystem universe, universities or academic institutions can be argued to be the most suitable to foster such ecosystems. Looking at the larger purpose and complexities involved in building and making them functional, role of policy and infrastructure is critical. The government certainly play pivotal role but universities or academic institutions are better positioned to connect the government with the society. More importantly, they are autonomous, independent and hence more credible. Further, as the academic institutions attract large number of bright minds—students, academics and practitioners, they are naturally destined to be hotbed of ideas and innovations. Universities provide an ideal platform with free thinking, creative culture for product and business ideas to germinate. Being in the business of knowledge generation and dissemination, academic worlds, by default, are geared to stimulate new thinking, provide know-how and build skills that facilitate in building the ecosystem. Should the universities focus on the application of knowledge as well, they provide risk-free environment for experimental orientation and validation of ideas.

Thus, due to their knowledge focus and trustworthiness, academic institutions are ideally positioned to be at the center of the ecosystem. In emergence of Silicon Valley, for example, role of Stanford University and other academic institutions in the valley cannot be undermined.

Taking a Central Role in an Ecosystem

For emerging countries in Asia, where the entrepreneurship ecosystems are evolving, focus should be more on design and less on diagnostics of the ecosystems. With that in mind, academic institutions need to take a central role in shaping and fostering the ecosystems. In many Asian countries including India, professional institutions such as IITs and IIMs take prominence over universities. Due to their disciplinary focus, practice-orientation and agility, they have better suitability for developing and driving entrepreneurial ecosystem compared to universities which have wider, fundamental approach and lesser autonomy. While governments and policymakers committed to entrepreneurship have been motivating such institutions to have on-campus entrepreneurship centers and supporting them for developing the ecosystem that impacts communities beyond the campus, it is important for academic institutions to take leadership in this area on their own.

Conversations in the developing economies conscious of benefits of innovation-led entrepreneurship need to be around issues such as, how autonomous professional institutes or universities can take the central role in building and fostering entrepreneurial ecosystem; what organization mechanisms within such institutions are ideally suitable for such efforts; how their intellectual and network resources can be leveraged; and how the ecosystem benefits be channeled to academic inputs and activities to provide sustainability.

This monthly column provides macro perspectives on entrepreneurship ecosystem.