Entrepreneurial ecosystems : a comparison between the Netherlands and China : unique attributes of the respective ecosystems, what makes them work?

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Entrepreneurial Ecosystems: A comparison between the Netherlands and China. Unique attributes of the respective ecosystems, what makes them work?

by

Thomas Lock

UvA – 11349301 VU – 2606837

A THESIS

Submitted in partial fulfilment of the requirements for the degree

MASTER OF SCIENCE IN ENTREPRENEURSHIP

MSc. Entrepreneurship (Joint Degree)

Universiteit van Amsterdam / Vrije Universiteit Amsterdam Academic year 2016 - 2017

August 16, 2017

Approved by: Thesis Supervisor Dhr. Dr. G.T. Vinig

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Preface

Thomas Lock 2017.

This document is written by Thomas Lock, who declares to take full responsibility for the contents of this document, including mistakes.

The author declares that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Universiteit van Amsterdam and Vrije Universiteit are solely responsible for the supervision of completion of the work and not for the contents. Therefore, both Universities cannot be held

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Abstract

This research aims to determine the differences between the entrepreneurial ecosystems of the Netherlands and China. The entrepreneurial ecosystems will be broken down into pillars with so they can be measured and compared. Special attention is given to certain attributes or components within the ecosystems that make the individual ecosystems work, the so called ‘strong points’. To compare the ecosystems of China and the Netherlands, different databases where used to get a comprehensive understanding of both countries and their entrepreneurship ecosystems. Moreover, the databases of GEM and GEDI were used to make an actual comparison with standardized measurements. The results indicate that the best feature of the Chinese entrepreneurial ecosystem is the internal market, where Chinese entrepreneurs can benefit from many potential customers and a helping hand from the Chinese government, with enabling financing mechanisms in place and disabling mechanisms in place to limit (foreign) competitors. The Netherlands best feature in their ecosystem is the physical and service infrastructure in place. Also, cultural support for entrepreneurship seems to be high in the Netherlands, although this research is proposing that this measurement is not representative for the actual situation and in contributing to entrepreneurship or the ecosystem. Although these results provide an indication of both countries supportiveness of an entrepreneurial climate and therefore enabling environment for ecosystems, this research questions the representativeness of these results considering the actual observed situation in both countries due to several reasons. This research concludes that research should focus on local or regional entrepreneurial ecosystems with the same objectives instead of countries if one wants to obtain more reliable and representative results and make more meaningful comparisons. Finally, future research should focus on the impact of cultural differences on measurement scores.

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List of Figures

Figure 1. Chinese entrepreneurial ecosystem measured via the GEM National Expert Survey. .... 4

Figure 2. Dutch Entrepreneurial Ecosystem measured via the GEM National Expert Survey. ... 4

Figure 3. The Eight Pillars of an Entrepreneurial Ecosystem. ... 10

Figure 4. Domains of the Entrepreneurship Ecosystem... 12

Figure 5. The Entrepreneurial Ecosystem Configuration ... 14

Figure 6. Structure of the Global Entrepreneurship Index ... 19

Figure 7. Global Entrepreneurship Monitor conceptual framework ... 20

Figure 8. Global Competitiveness Index framework ... 20

Figure 9. Framework of the Global Innovation Index 2017 ... 21

Figure 10. Startup clusters the Netherlands ... 25

Figure 11. Industry clusters China ... 26

Figure 12. Industrial clusters China II ... 27

Figure 13. Entrepreneurial Ecosystem Netherlands... 28

Figure 14. GEI score Netherlands ... 29

Figure 15. Entrepreneurial Ecosystem China ... 31

Figure 16. GEI score China ... 32

Figure 17. GEM Comparison Ecosystems the Netherlands and China ... 34

Figure 18. GEI Comparison Ecosystems the Netherlands and China ... 35

Figure 19. Funding Ecosystem the Netherlands ... 39

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List of Tables

Table 1. Nine attributes of a successful startup community ... 8

Table 2. Key principles to build entrepreneurial ecosystems ... 9

Table 3. Components of Entrepreneurial Ecosystem Pillars ... 11

Table 4. Indicators of entrepreneurial ecosystem vibrancy and how to measure them ... 14

Table 5. Measurement of ecosystem vibrancy ... 23

Table 6. GEM Comparison Ecosystems the Netherlands and China... 34

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List of Abbreviations

APS Adult Population Survey China The People’s Republic of China

EFCs Entrepreneurial Framework Conditions EU European Union

EY Ernst & Young G20 Group of Twenty

GCI Global Competitiveness Index GDP Gross Domestic Product

GEDI Global Entrepreneurship and Development Institute GEI Global Entrepreneurship Index

GEM Global Entrepreneurship Monitor

GERD Gross Expenditure on Research and Development GII Global Innovation Index

IPO Initial Public Offering NES National Expert Survey

OECD Organisation for Economic Co-operation and Development R&D Research and Development

SMEs Small and Medium-sized Enterprises VC / VCs Venture Capital / Venture Capitalists VOC Vereenigde Oostindische Compagnie WEF World Economic Forum

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Introduction

Entrepreneurship has many different definitions from different authors. However, there is consensus that there are four competing definitions of entrepreneurship (Aldrich, 2012; Lippmann, Davis, & Aldrich, 2005):

1. The setting up of high-growth and high-capitalisation firms (as opposed to low-growth and low-capitalisation ‘lifestyle’ businesses);

2. Innovation and innovativeness leading to new products and new markets (the Schumpeterian tradition);

3. Opportunity recognition (the Kirznerian tradition); 4. The creation of new organisations.

Hence, it is widely acknowledged that entrepreneurship is beneficial in various forms and in different contexts. These benefits, both financial and non-financial, are experienced at different levels, including the individual, organizational, regional and national level (Luke, Verreynne, & Kearins, 2007). The Group of Twenty (G20) even describes entrepreneurship as a method to tackle unemployment, foster competition, increase innovativeness and stimulate economic growth (G20, 2014; Simatupang, Schwab, & Lantu, 2015) which is acknowledged by the European Union (EU) (European Union, 2017), Organisation for Economic Co-operation and Development (OECD) (OECD, 2004) and the World Economic Forum (WEF) (WEF, 2016). Furthermore, entrepreneurship can fulfil certain personal objectives, such as independence, autonomy, and provide an opportunity to experiment leading to positive learning outcomes (Luke et al., 2007). The fact that these benefits have been acknowledged by these institutions is one of the reasons that entrepreneurship has gained attention by governments and the public. Entrepreneurship is deemed as important due to the opportunities it creates to improve personal well-being and develop regional and national sustainable economic growth (Auerswald et al., 2015; Mason, Colin; Brown, 2014).

According to Shane & Venkataraman (2007), the field of entrepreneurship involves “…the study of sources of opportunities, the process of discovery, evaluation, and exploitation of opportunities, and the set of individuals who discover, evaluate, and exploit them…” (p.172). This broad definition already suggests that entrepreneurship entails many facets for different scholarly fields. However, increased interest has been going out to the set of individuals, their

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environment, and how opportunities are exploited and created; thus, how entrepreneurship is created or developed in the process. Especially the interaction between interdependent actors within a specific region or nation has gained increased attention, due to the potentially positive impact it can bring to individuals and organizations within these regions and countries. Entrepreneurship can eventually lift regions, even nations, and help progress economies. Therefore, governmental and non-governmental organizations have been looking for ways to promote entrepreneurship and support entrepreneurs. However, the results of such policies and supportive measures are mixed, and it seems unclear which policies and supportive projects work and do not work; and to what extend this relates to policy or other factors (Auerswald et al., 2015; Mazzarol, 2014). To produce and implement more adequate policy and supportive measures, it seems that the phenomenon of entrepreneurship within a certain environment and between sets of individuals and/or companies, the so called ‘entrepreneurial ecosystems’, should be studied more into depth, which consequently is the aim of this research.

There seems to be a lack of understanding how different elements in entrepreneurial ecosystems are connected, what cause and effect is within an entrepreneurial ecosystem, and which institutions have an impact on the structure and performance of entrepreneurial ecosystems (Borissenko & Boschma, 2016). Therefore, this research will try to identify specific components, elements or attributes within two different ecosystems and define the (unique) attribute(s) that make the ecosystems work. In other words, success factors within ecosystems will be identified and consequently be evaluated in their performance, keeping in mind that the outcomes of entrepreneurial ecosystems should refer to the earlier mentioned four competing definitions of entrepreneurship.

Furthermore, this research aims to determine whether these attributes are transferable towards the respective other ecosystem. The focus will be on the entrepreneurial ecosystems of the Netherlands and The People’s Republic of China (China). These respective ecosystems where chosen due to several reasons. First, there seem to be many differences between the Dutch and Chinese entrepreneurial ecosystems, which makes the comparison relevant and interesting. According to the National Expert Survey (NES) executed by the Global Entrepreneurship Monitor (GEM), these differences transform over time, which is indicated by the scores in different pillars (Figure 1 & 2). It is interesting to break the respective ecosystems down into components and compare them to each other. Second, several rankings about entrepreneurial

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ecosystems rank the Netherlands and China quite differently. The Global Entrepreneurship and Development Institute (GEDI) (“Global Entrepreneurship Index _ Global Entrepreneurship Development Institute,” 2017) ranks the Netherlands as the number ten healthiest entrepreneurial ecosystem of the world, where China ranks as number forty-eight on their ranking named the Global Entrepreneurship Index (GEI). The WEF ranks the Netherlands as the fourth most competitive economy in the world, where China ranks as number twenty-eight (WEF, 2016). Although the Dutch ecosystem ranks high in all lists, China is producing 23% of the worlds unicorns (private companies valued at $1 billion or more), which is the highest rate after the United States (“The International Unicorn Club: 91 Private Companies Outside The US Valued At $1B+ On One Map,” 2017). Additionally, the Netherlands is a small country with a relative big influence in entrepreneurial and innovative processes and on the global economy (Cornell, INSEAD, & WIPO, 2016; World Economic Forum, 2015), which is a considerable achievement considering the country size and the number of people working and living within its borders. China on the other hand, is the country with the biggest population on planet earth and a growing economic power. Governmental policy changes have opened up the traditionally state-owned economy and is paving the way for entrepreneurship and innovation to take place (Roth, Seong, & Woetzel, 2015; Xiaodi & Jingwei, 2007; Xiaoqiang et al., 2016a). Clearly, both countries are benefitting from certain aspects of their ecosystems, although further research is needed to determine which key factors enable these successes. The rankings will be compared to gain more insight in the performance of both ecosystems. The results of these rankings should also provide insight in certain developments of ecosystem pillars. Moreover, it will be interesting to see why the Netherlands and China rank differently across the different rankings and within. This will provide valuable insight about the rankings, their measurements and to what extend the scores reflect the actual situation observed.

To conclude, the entrepreneurial ecosystems of both countries will be unravelled using different frameworks and relevant theories of entrepreneurial ecosystems. The questions that will be addressed in this research will focus on the specific ecosystems, and which attributes of the ecosystems make them work. What are the unique attributes of the respective ecosystems? And are these unique attributes transferable to the respective other ecosystems, and will it be likely to work there? Will it be relevant to copy unique attributes or processes towards the other

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ecosystems? Or can lessons be learned from one of the ecosystems to improve the respective other ecosystem and vice versa?

Figure 1. Chinese entrepreneurial ecosystem measured via the GEM National Expert Survey.

Source: Global Entrepreneurship Monitor (2017) from: http://www.gemconsortium.org/data/key-nes

Figure 2. Dutch Entrepreneurial Ecosystem measured via the GEM National Expert Survey.

Source: Global Entrepreneurship Monitor (2017) from: http://www.gemconsortium.org/data/key-nes

This research will contribute to the state of the art knowledge about entrepreneurial ecosystem performance based on different attributes or components within ecosystems and how

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they behave in respect to each other and form a functioning entrepreneurial ecosystem. This research aims to improve insights in the specific entrepreneurial ecosystems of China and the Netherlands and determine whether insights of one entrepreneurial ecosystem can be applied in another entrepreneurial ecosystem. This research will be relevant as a case example for the Netherlands and China, but also for policy makers and leaders who want to strengthen regions, countries and ecosystems overall. Additionally, this research will combine existing measurement indexes and challenge their measured ranking by triangulating different sources of data and comparing this to the actual observed situation.

The following research questions and objectives are considered.

Central research question: What are the main differences between the entrepreneurial ecosystems of the Netherlands and China? To answer this question, this research will focus on certain attributes, elements and components within the ecosystems, which are measured according to relevant indexes, frameworks and theories. This research aims to conclude if there are differences between the respective ecosystems and if these differences can be explained. Can these differences be attributed to certain circumstances or conditions within the respective ecosystems, or do differences exist because they are carefully constructed in a unique way to the specific conditions which are necessary in that environment. What can be learned from these differences?

Objectives: To answer the central research question, several objectives are set in this study. First, the term ‘entrepreneurial ecosystem’ will be studied and decomposed into understandable elements. Then, the entrepreneurial ecosystems of the Netherlands and China will be studied and compared to find similarities and differences. This will allow for further investigation and look for unique attributes of the respective ecosystems. These differences and similarities will provide insights that should be able to provide information about the ‘underlying magic’ of the ecosystems. Data from various sources, which measure certain aspects of economic power, innovative and entrepreneurial attributes and ecosystem components, of both countries and their respective regions, will be used.

After this introduction, existing relevant theory and frameworks in the background section will explain the concept of entrepreneurial ecosystems. This is relevant to gain a better understanding of the concept, which is needed to understand how entrepreneurial ecosystems can

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be measured and compared to each other. The data sources which will provide the information necessary to measure and compare the ecosystems will be described and their methodology will be briefly explained in the method section afterwards. The method section will provide a basis which allows the reader to connect the theory from the background section with the actual measurement points provided in the different indexes that are used. The entrepreneurial ecosystems of the Netherlands and China will be compared in the results section. The different results which indicate the performance or outputs of both ecosystems will be analyzed and both countries performances regarding the different entrepreneurial ecosystem components will be further explained into detail. Afterwards, there will be a discussion of the findings, where the results will be critically analyzed to better understand the findings and determine if they match with the actual picture that one can distinguish in both ecosystems. Finally, a conclusion will be drawn based upon the findings and the discussion and implications for future research will be outlined.

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Background

In this section, the theoretical framework, which will be the guiding theory of this research, will be outlined and explained.

Entrepreneurial ecosystems

Vogel (2013) states: “The terminology “ecosystem” originated from ecology, having first been used in print by Tansley (1935), who stated that organisms cannot be separated from “…the environment of the biome – the habitat factor in the widest sense… with which they form one physical system..” (p. 299)” (p. 6)”. In the case of entrepreneurial ecosystems, the entrepreneur, who is at the centre, can replace the organism. “The fundamental idea of an entrepreneurship ecosystem is to create a conducive environment to support innovation, the formation of new successful firms, and corresponding sustainable employment growth within a specific geographic region…” (Simatupang et al., 2015, p. 391). The “ecosystem” could be described as the community around the entrepreneur, which includes interdependent actors and the (social) context which enables or restricts entrepreneurship combined with the interdependencies or processes within this environment or system (Stam, 2014). This highly complex and multi-level construct includes various stakeholders at the regional field level, including policy makers, universities and industry associations (Isenberg, 2011). At firm level, activity among startups and existing businesses, both small and big, boost the engine to an innovation-based regional economic development because relevant activities, and therefore knowledge, transcends the firm or organizational boundaries when it is shared within the ecosystem. It is important to understand that these complex systems of interdependent actors form a whole. Although these actors, institutions and social constructs might all fulfil a different role; they do influence each other, thereby making them reliant on each other. In other words, entrepreneurial action within the ecosystem is enabled or constrained by a comprehensive set of actors and resources. Understandably, governance of this system plays a crucial role, since it should “enable connections that are sufficiently stable to enable investments but sufficiently flexible to allow recombination for innovation to take place” (Stam, 2014, p. 2).

Feld (2012) describes in his book ‘Startup Communities: Building an Entrepreneurial Ecosystem in Your City’ how the entrepreneurial ecosystem of Boulder (Colorado) flourished, and uses this example as a blueprint for other regions willing to build a vibrant startup

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community. Feld (2012) stresses that if you bring together key partners who support growth, entrepreneurial ecosystems can be created anywhere. Feld (2012) proposes nine attributes of a successful startup community, which are described in Table 1.

Table 1. Nine attributes of a successful startup community Attribute Description

Leadership Strong group of entrepreneurs who are visible, accessible and committed to the region being a great place to start and grow a company

Intermediaries Many well-respected mentors and advisors giving back across all stages, sectors, demographics, and geographies as well as a solid presence of effective, visible, well-integrated accelerators and incubators

Network density Deep, well-connected community of startups and entrepreneurs along with engaged and visible investors, advisors, mentors and supporters. Optimally, these people and organizations cut across sectors, demographics, and culture engagement. Everyone must be willing to give back to his community

Government Strong government support for and understanding of startups to economic growth. Additionally, supportive policies should be in place covering economic development, tax, and investment vehicles

Talent Broad, deep talent pool for all level of employees in all sectors and areas of expertise. Universities are an excellent resource for startup talent and should be well connected to community

Support services Professional services (legal, accounting, real estate, insurance, consulting) are integrated, accessible, effective, and appropriately priced Engagement Large number of events for entrepreneurs and community to connect,

with highly visible and authentic participants (e.g. meet-ups, pitch days, startup weekends, boot camps, hackatons, and competitions)

Companies Large companies that are the anchor of a city should create specific departments and programs to encourage cooperation with high-growth startups

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and other forms of financing should be available, visible, and accessible across sectors, demographics, and geography

Source: Feld (2012, pp. 186–187).

One could argue that this boulder thesis by Feld (2012) is primarily focussed on the entrepreneurial ecosystem in the Boulder region, which is commonly associated with the digital and high-tech industry. For example, the number of hackatons might not be a good indicator in other industries. Although this industry is often linked with innovation, innovation and entrepreneurship is not restricted to this industry.

According to Isenberg (2010), there is no exact recipe to create an entrepreneurial ecosystem. However, Isenberg (2010) states that nine key principles, which are sensitive to local conditions, should be followed by (public) leaders in order to build an entrepreneurial ecosystem. These nine key principles are stated in Table 2.

Table 2. Key principles to build entrepreneurial ecosystems 1. Stop emulating Silicon Valley

2. Shape the ecosystem around local conditions 3. Engage the private sector from the start 4. Favor the high potentials

5. Get a big win on the board 6. Tackle cultural change head-on 7. Stress the roots of new ventures

8. Do not over engineer clusters; help them grow organically 9. Reform legal, bureaucratic, and regulatory frameworks Source: Isenberg (2010)

The first principle builds on the argument just made about the boulder thesis. Silicon Valley is probably the most famous entrepreneurial ecosystem known to the public and is a great example for other entrepreneurial ecosystems to look up to. However, one cannot simply copy an

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existing template and expect it to work in another setting, in another region, with another (business) culture and other infrastructure. Ecosystems thrive on their unique features, which are shaped and created locally (Isenberg, 2010).

WEF (World Economic Forum, 2013) identified eight pillars that make up a (successful) entrepreneurial ecosystem, which is displayed in Figure 1.

Source: World Economic Forum (2013, p. 6)

According to the World Economic Forum (2013), these eight pillars each have a set of components, which are listed in Table 3. Although ecosystems might (drastically) differ in their depth and breadth throughout the world; they are always characterized by the eight pillars described, which reinforce the starting and scaling of startups and their environment.

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Table 3. Components of Entrepreneurial Ecosystem Pillars

Accessible markets Human capital/workforce

• Domestic market:

o Large companies as customers o Small/medium-sized

companies as customers o Governments as customers • Foreign market:

o Large companies as customers o Small/medium-sized

companies as customers o Governments as customers

• Management talent • Technical talent

• Entrepreneurial company experience • Outsourcing availability

• Access to immigrant workforce

Funding & finance Support systems/mentors

• Friends and family • Angel investors • Private equity • Venture capital • Access to debt • Mentors/advisers • Professional services • Incubators/accelerators

• Network of entrepreneurial peers

Government & regulatory framework Education & training • Ease of starting a business

• Tax incentives

• Business-friendly legislation/policies • Access to basic infrastructure

• Access to

telecommunications/broadband • Access to transport

• Available workforce with pre-university education

• Available workforce with university education

• Entrepreneur-specific training

Major universities as catalysts Cultural support • Promoting a culture of respect for

entrepreneurship

• Playing a key role in idea-formation for new companies

• Playing a key role in providing graduates for new companies

• Tolerance of risk and failure • Preference for self-employment • Success stories/role models • Research culture

• Positive image of entrepreneurship • Celebration of innovation

Source: (World Economic Forum, 2013, p. 7)

As one can see, the eight pillars are broken down into elements, where most of them can be measured. For this research, it is critical to combine ecosystems measurable components with

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local regulation and policies, culture and geographic information to understand why the entrepreneurial ecosystem is working in the way it does. Maybe the most advanced work on entrepreneurial ecosystems is by Isenberg & Onyemah (2016), and is graphically displayed in Figure 4.

Figure 4. Domains of the Entrepreneurship Ecosystem Source: (Mason, Colin; Brown, 2014, p. 6)

This model, proposed by Isenberg (2014), is extensive and summarizes the other frameworks and models which are described before. These frameworks and models will form a basis of knowledge to help assess and measure the specific components of the entrepreneurial ecosystems, assess their importance and relevance, compare them to the components of the other entrepreneurial ecosystem and see how they contribute in the ecosystems.

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Measuring entrepreneurial ecosystems

As one can see, there are multiple attributes of entrepreneurial ecosystems that can be measured. The question however is; how to measure them or which method to use? Ande (2013) compared nine approaches that measure entrepreneurial ecosystems. Since this research aims to compare two entrepreneurial ecosystems on country level, the methodology used in this research will be using assessment frameworks which measure on national level. A few examples are: George Mason University’s Global Entrepreneurship and Development Index (GEI), the World Bank’s Doing Business ranking and the OECD’s Entrepreneurship Measurement Framework. Furthermore, the Koltai Six+Six and the Babson Entrepreneurship Ecosystem Project can be used at (sub-)national level. The OECD approach is the most extensive, but the OECD has limited data available on China compared to the Netherlands, which makes the available data on the Netherlands usable as research material for background knowledge. However, the OECD have conducted recent economic surveys, which will be used in this research (Oecd, 2017; OECD Economic Surveys: Netherlands 2016, 2016). The GEDI provides data on both the Netherlands and China, and is very extensive. The GEDI measures on a fourteen pillar scale, which comes from the entrepreneurial ecosystem configuration by Ács, Szerb, Autio, & Lloyd (2017). A graphical representation of this model can be seen in Figure 5. The Babson approach is not used as measurement, but is adding relevance and understanding to the concept of the entrepreneurial ecosystem and its components; and how the different components can be understood and which parameters are important to consider when analysing the results. Therefore, this research will primarily focus on the GEDI measurement framework to measure the entrepreneurial ecosystems and check for differences between the Netherlands and China. Also, the GEM data will also function as an indicator for the national level entrepreneurial ecosystems and indicate which pillars or components are worth to analyse further. The global competitive index (GCI) from the WEF will be consulted to triangulate data and consequently collect more comprehensive and reliable data to make more elaborate conclusions.

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Figure 5. The Entrepreneurial Ecosystem Configuration Source: (Ács et al., 2017, p. 14)

Stangler & Bell-Masterson (2015) and Wilcox (2016) who all write for the Kauffman Foundation, have come up with methods to measure ecosystems and found which indicators to use for each of the ecosystems components. First, Stangler & Bell-Masterson (2015) suggest that there are four indicators that measure the entrepreneurial ecosystem vibrancy. These indicators are: Density, Fluidity, Connectivity and Diversity. An overview of how to measure these indicators can be found in Table 4.

Table 4. Indicators of entrepreneurial ecosystem vibrancy and how to measure them Indicator Measure

Density

New and young firms per 1000 people

Share of employment in new and young firms Sector density, especially high tech

Fluidity

Population flux

Labor market reallocation High-growth firms Connectivity Program connectivity Spinoff rate Dealmaker networks Diversity

Multiple economic specializations Mobility

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Immigrants

Source: (Stangler & Bell-Masterson, 2015, p. 2)

Stangler & Bell-Masterson (2015) argue that objectives for different entrepreneurial ecosystems may vary; where some focus on attracting financing, others focus to attract talent and others focus to build an ecosystem around a particular kind of company or job. When the objectives vary, the inputs vary as well and this should be reflected in the measurements. Therefore, a measurement of an ecosystems vibrancy might be more suitable than research and development (R&D) funding at universities, the number of engineering degrees, the number of patents or the amount of available investment capital at hand.

To summarize, this research will look at different aspects of entrepreneurial ecosystems and use different measurements and indicators to assess the entrepreneurial ecosystems of the Netherlands and China. Moreover, similarities, but above all, differences between the entrepreneurial ecosystems of the Netherlands and China will be identified. The identified differences will help to explain why certain aspects of the respective entrepreneurial ecosystems work in that environment.

Based on the central research question and this section, with background information about the construct of entrepreneurial ecosystems and how the attributes of these ecosystems can be measured, the following hypotheses are formulated.

• What are the main differences between the entrepreneurial ecosystems of the Netherlands and China?

It is expected that the most eye-catching differences between both entrepreneurial ecosystems will be in the cultural (especially societal norms) and policy (especially government) dimensions. Where the government in the Netherlands seems to have a more facilitating role than the Chinese government, which seems like a top-down government. Additionally, it is expected that failure is less well accepted and risk taking is less prevalent in China than in the Netherlands.

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It is expected that these (and other) differences can be attributed to many elements within the ecosystems, but especially governmental influence in China seems to play a restrictive role, where the role of the Dutch government is more enabling.

• What can be learned from these differences?

It is expected that both ecosystems work due to their ‘unique’ structure. But both countries will be able to let their ecosystems grow and learn from their respective others unique attributes. The real challenge is to determine whether it is possible to implement certain unique features from one ecosystem in the respective other ecosystem, and if it will improve the ecosystem or that it will generate the same effect in the respective other ecosystem.

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Methods

In this chapter, the methods of this research are described. Nature, type and design of the research

This qualitative research, has the design of a desk research, meaning that it will use data from secondary sources to investigate the entrepreneurial ecosystems of the Netherlands and China, which will allow for a comparison between the two entrepreneurial ecosystems of the respective countries. The nature of this research is, for that reason, explorative.

The design of the desk research

Six articles of leading authors in the field of entrepreneurial ecosystems where provided by Dr. G.T. Vinig as a foundation for this research. These articles included literature by the Kauffman Foundation and Birch Research, which are both institutes that have expertise on the topic of entrepreneurship, innovation and consequently about entrepreneurial ecosystems. All references from these articles where checked to identify authors who were quoted several times across the different articles. If an author appeared over two or more articles, additional literature from this author was collected. In the first stage of this research, the construct of entrepreneurial ecosystem was investigated; search terms included: ‘(elements of) entrepreneurial ecosystem (China / the Netherlands)’, ‘measure entrepreneurial ecosystems’, ‘entrepreneurship ecosystem’, ‘innovation ecosystem’ and ‘types of entrepreneurial ecosystems’. These search terms, combined with the authors, generated over forty articles, which were used as additional background literature. In the second stage of this research, the entrepreneurial ecosystems of the Netherlands and China were investigated and therefore measured according to relevant theory and frameworks that were found in the literature study.

Data collection

Data sources suitable to measure the different components of the respective ecosystems include the GEDI 2017 global entrepreneurship index (GEI), the GEM data of 2016 and the GCI of the WEF. This data allows to make comparisons between the Netherlands and China where there are standardized measurements which make the results comparable. These datasets will allow further research into the success factors of both entrepreneurial ecosystems. Different

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sources of information are collected to triangulate data from different sources and combine these to find sufficient results to draw conclusions in the end.

Databases

A short description of the databases and their corresponding methodology will be given.

Global Entrepreneurship and Development Institute

The Global Entrepreneurship and Development Institute (GEDI) produces an annual index, the Global Entrepreneurship Index (GEI), that measures the health of entrepreneurial ecosystems of 137 countries around the world and ranks these according to their performance. “The GEDI methodology collects data on the entrepreneurial attitudes, abilities and aspirations of the local population and then weights these against the prevailing social and economic ‘infrastructure’ … This process creates 14 ‘pillars’ which the GEDI uses to measure the health of the regional ecosystem” (“Global Entrepreneurship Index _ Global Entrepreneurship Development Institute,” 2017). The GEI is built on three sub-indexes, which each consist of multiple pillars. These pillars indicate a score based on measured variables. To better understand how these scores are determined, an overview of GEIs structure is shown in Figure 6.

Global Entrepreneurship Monitor

The Global Entrepreneurship Monitor (GEM) produces an annually updated entrepreneurial country profile of over 100 countries around the world. The methodology collects data GEM National Teams from standardized procedures in all countries with help of national bodies. Two surveys make the overall GEM research: 1) Adult Population Survey (APS) and 2) National Expert Survey (NES), with the conceptual framework shown in Figure 7. The APS tracks the entrepreneurial attitudes, activity and aspirations of (minimal 2000) individuals in each country. The NES monitors nine factors that are believed to have a significant impact on entrepreneurship, known as the Entrepreneurial Framework Conditions (EFCs). These factors are rated on a 1-9 Likert scale by a minimum of 36 carefully chosen ‘experts’ (GEM, 2014). The nine EFCs are: entrepreneurial finance, government policy, government entrepreneurship programs, entrepreneurship education, R&D transfer, commercial and legal infrastructure, entry

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regulation, physical infrastructure and cultural and social norms (Global Entrepreneurship Research Association, 2016).

Figure 6. Structure of the Global Entrepreneurship Index Source: (Ács et al., 2017, p. 1)

World Economic Forum

The World Economic Forum (WEF) produces an annual Global Competitiveness Index (GCI), which assesses the competitiveness landscapes of 138 economies. This index will provide insights in the drivers of productivity and prosperity, and therefore contribute to the understanding of the national ecosystems. The WEF methodology is data collection from (multiple) partners and sources within countries combined with own data (WEF, 2016). Various indicators are measured and form an aggregated score for a certain pillar. The pillars all have an aggregated combined score that contribute to the overall GCI score (WEF, 2016). An overview of the GCI framework is shown in Figure 8.

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Figure 7. Global Entrepreneurship Monitor conceptual framework Source: (Global Entrepreneurship Research Association, 2016, p. 14)

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Global Startup Ecosystem Ranking

Startup Genome composes a report with data of over 10.000 startup companies and 300 partner organizations. If startups around the world want to thrive, the underlying influences of startup ecosystems must be understood. The methodology consist of a survey among thousands of startups across 56 ecosystems and public data (from partners) (Startup Genome Project, 2017).

Global Innovation Index

The Global Innovation Index (GII) provides detailed metrics about the innovation performance of 127 countries and economies around the world. Its methodology measures 81 indicators that explore a broad vision of innovation, including political environment, education, infrastructure and business sophistication. As with the GCI, this index will provide insights in the drivers of the national ecosystems (Cornell et al., 2016). An overview of the measurement framework is shown in Figure 9.

Figure 9. Framework of the Global Innovation Index 2017 Source: (Cornell et al., 2016, p. 48)

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Data analysis

The data that is collected from the GEM and GEI will be used to determine which pillars are the strong domains of the Netherlands and China considering entrepreneurship and the entrepreneurial ecosystems. A meta-analysis will be conducted where the parameter values from both countries which allows for both indexes to be compared. The data of GII and GCI will be used to further analyse the parameters and determine specific strengths or weaknesses within the parameters that are used in the GEM and GEI indexes. Both indexes are used since the GEI measures the health of an entrepreneurial ecosystem and the GEM sketches a country profile on entrepreneurship. Together, they provide an extensive overview and can reduce bias, since the data is from multiple sources.

Validity and reliability

All indexes used in this research are considered extensive and reliable, are regularly cited in high quality academic publications and provide international organizations and governments with data. The methodology of the indexes is validated in rigorous academic peer reviews, and has been reported in media, including The Economist, Financial Times and Wall Street Journal. Furthermore, its methodology is endorsed by multiple leading universities, national governments, the European Union and has helped to shape policy in trans-national organisations such as the United Nations Conference on Trade and Development. Sources include the International Monetary Fund, The World Bank, National governments data and national teams. Therefore, the data will be able to sketch a detailed overview of both countries.

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Results

As described before, an indication on entrepreneurial ecosystems vibrancy can be estimated with the model of Stangler & Bell-Masterson (2015), which is shown in Table 5. Table 5. Measurement of ecosystem vibrancy

Indicator Measure The Netherlands China

Density

New and young firms per 1000 people (ages 15-64) 5.341 / 3-4%2 - / < 1%3 Share of employment in new and young firms 20%4 -

Sector density, especially high tech N/A N/A

Fluidity

Population flux (migrants/1000 population)5 2 0

Labor market reallocation 23%6 -

High-growth firms 10%7 -

Connectivity

Program connectivity N/A N/A

Spinoff rate 5 – 8%8 -

Dealmaker networks - -

Diversity

Multiple economic specializations High9 Medium10

Mobility - -

Immigrants 12.1%11 <1%12

1_{(“New business density (new registrations per 1,000 people ages 15-64) | Data,” 2017)}

2_{(“Think We’re the Most Entrepreneurial Country In the World? Not So Fast - The Atlantic,” 2017)} 3_{(“Think We’re the Most Entrepreneurial Country In the World? Not So Fast - The Atlantic,” 2017)} 4_{(Criscuolo, Gal, & Menon, 2014)}

5_{(“The World Factbook — Central Intelligence Agency,” 2017)} 6_{(Bruil, den Butter, & Kee, 2010)}

7_{(Eurostat, 2015)}

8_{(Bernardt, Kerste, & Zoetermeer, 2002)} 9_{(Pouwels-Urlings & Wijnen, 2013)} 10_{(Xiaodi & Jingwei, 2007)}

11_{(“Foreign-born population by country of birth, 1 January 2016 - Eurostat,” 2017)} 12_{(“Center for China and Globalization | 中国与全球化智库 – 中国与全球化智库,” 2017)}

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Unfortunately, there is not enough reliable data available for China to give a solid indication of the ecosystem vibrancy and to compare both countries. Even for the Netherlands, the data available is not that readily available and ia sometimes outdated. To use this model, more into depth research is needed that is specifically focussed at the ecosystem vibrancy of both countries, which is not the goal of this research. Therefore, this chapter will describe the different pillars of the entrepreneurial ecosystems of the Netherlands and China with their corresponding measurements. Because this research looks at national level data for the entrepreneurial ecosystems, the different (entrepreneurial) clusters of industries will be described to better understand what the countries specific strengths and weaknesses are. Subsequent, an introduction on both countries will be given by looking at the GCI (WEF), the GEM data and GEDI data from both countries. This data will suggest which domains stand out and need further investigation to look for unique elements within the ecosystems of the Netherlands and China.

Clusters

The Netherlands promotes itself with different clusters for different areas of expertise. According to StartupDelta (“StartupDelta,” 2017), an initiative created by the Dutch government to promote and help develop the Dutch entrepreneurial ecosystem, the Netherlands has various startup clusters with expertise in different subjects. Thirteen clusters are identified, which are shown in Figure 10. China also has various clusters of industries with different specialities. An overview of cluster from different industries in China can be found in Figure 11 and 12. Both the Netherlands and China promote their ecosystems by promoting certain areas of expertise they say they excel in. The Netherlands is promoting their ecosystem through StartupDelta (“StartupDelta,” 2017), but also through the government official website Holland Trade and Invest (“Holland Trade and Invest,” 2017). The Netherlands promotes expertise in the area of agriculture and food, creative industries, chemical industry, energy, high tech, horticulture and starting materials, life sciences & health, logistics and water (“Holland Trade and Invest,” 2017, “StartupDelta,” 2017). Key industries include agroindustries, metal and engineering products, electrical machinery and equipment, chemicals, petroleum, construction, microelectronics and fishing (“The World Factbook - Netherlands — Central Intelligence Agency,” 2017). China is world leader in gross value of both industrial and agricultural output. Furthermore, mining and ore processing of metals and coal, machine building, armaments, textiles and apparel, petroleum,

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cement, chemicals, fertilizers, consumer products (including footwear, toys and electronics), food processing, transportation equipment (including automobiles, rail cars and locomotives, ships and aircrafts), telecommunications equipment, commercial space launch vehicles and satellites are among the key industries (Li & Fung Research Centre, 2010; “The World Factbook - China — Central Intelligence Agency,” 2017).

Figure 10. Startup clusters the Netherlands Source: (“StartupDelta,” 2017)

The Startup Genome Project (2017) ranks regional ecosystems, where both the Netherlands and China are represented in the top 20. The Netherlands regional entrepreneurial ecosystem of ‘Amsterdam – StartupDelta’ ranks as number 19 (which is an improvement compared to the previous ranking, due to three new entrants). The name for the cluster Amsterdam however is misleading, while the measurement encompasses surrounding communities within a 150 km2 radius, which encompasses almost the whole Netherlands and therefore all entrepreneurial clusters within the Netherlands. A Specific strength of this ecosystem is that nearly 90 percent of the Dutch population speaks English, which makes the Netherlands an attractive place for international founders, talent and investors. The Dutch

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ecosystem with a growing number of initiatives and policies, which include a startup visa and favourable tax regulations (“Support for small and medium-sized enterprises (SMEs) | Enterprise and innovation | Government.nl,” 2017). The value of the ecosystem is estimated at $14 billion.

Figure 11. Industry clusters China

Source: (“China’s Industry Clusters - China Briefing News,” n.d.)

China has two regional ecosystems in the global top twenty; Shanghai as number 8, and Beijing as number 4 (Startup Genome Project, 2017). Shanghai scores particularly well regarding funding, where citizens can apply for a loan up to $30,000 without collateral or guarantee. This is one of the effects of China’s Mass Entrepreneurship and Innovation Policy (“China boosts mass entrepreneurship and innovation,” 2017; Junkuo, 2016). Another interesting aspect is that Venture Capitalists (VCs) can apply for reimbursement (up to $900,000) if their investment in a local early-stage startup fails. The value of this ecosystem is valued at $42 billion. Beijing is

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considered as the knowledge capital of China, with over 70 colleges and universities and over 280 scientific research institutes. Therefore, an abundance of talent can be found here. As in Shanghai, funding is readily available. Beijing claims that over 40 startups are valued above $1 billion (unicorn), which would make the second highest concentration of unicorns in the world (Startup Genome Project, 2017). The ecosystem is valued at $131 billion.

Figure 12. Industrial clusters China II

Source: (Hernández-Rodríguez & Montalvo-Corzo, 2012, p. 66)

The Netherlands

The Netherlands scores high on all kinds of lists and indexes when it comes to innovation, entrepreneurship and the overall business climate. According to GEM (“GEM Global Entrepreneurship Monitor - Netherlands,” 2016), the Netherlands is an innovation-driven economy and has a population of 16.9 million people. The Netherlands gross domestic product (GDP) is estimated at $738.4 billion, which comes down to $43,603 GDP Per Capita. Small and

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medium-sized enterprises (SMEs) are estimated to contribute 63% to GDP. A broader overview on the entrepreneurial ecosystem can be seen in Figure 13. As one can see, the Netherlands scores well above GEM average, and scores between 3 and 4 in all domains except for physical infrastructure, where it even scores between 4 and 5, which makes it the Netherlands best feature.

Figure 13. Entrepreneurial Ecosystem Netherlands

Source: (“GEM Global Entrepreneurship Monitor - Netherlands,” 2016)

According to GEDI 2017 (Ács et al., 2017), the Netherlands ranks as the number ten best entrepreneurial ecosystem in the world on the GEI, where it ranks as number seven of its region (Europe). An overview can be found in Figure 14. According to the GEDI, the Netherlands strongest area is cultural support (highest score of 1). Other strong areas are opportunity startup, startup skills, opportunity perception, risk acceptance and competition (all score > 0.80). The weakest area of the Netherlands is human capital, where it scores under European and world average (0.38). The Netherlands also scores high in the global innovation index (GII), where it ranks as number three in the overall list of countries and also as number three of the high-income economies list (Cornell et al., 2016).

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Figure 14. GEI score Netherlands Source: (Ács et al., 2017, p. 183)

Other attributes that contribute to the attractiveness of the Dutch entrepreneurial ecosystem are a competitive economy, where the Netherlands scores as number four on the GCI of 138 countries (WEF, 2016). Although the Netherlands is such a small country, it has been, and still is, producing a couple of big companies along the way. Multinationals like KLM (The Royal Dutch Airlines), Heineken, Philips, DSM, AkzoNobel and Shell are just a few examples of companies from Dutch origin. More recent examples are booking.com, Takeaway.com, Adyen and Catawiki, which are now changing the landscapes of travel bookings, food delivery, money transfer and online auctioning (“StartupDelta,” 2017). One of the reasons for their success is because the Netherlands is a great launchpad for new ideas and therefore ventures. Besides, the Netherlands and its population is very open and innovative and because of that major foreign companies like to test their product in the Netherlands before they expand towards the rest of Europe. Furthermore, the Netherlands traditionally has had an open economy, where trade and foreign investment contribute for a great deal to the Dutch GDP. The Netherlands is the

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fifth-largest exporter of goods in the world, which can mostly be attributed to agri-food products and horticulture (Venema, Hogenboom, Blok, Meeuwisse, & van Egmond, 2016). Also, the Netherlands is a major importer of goods and services. The Netherlands is often called the ‘gateway to Europe’ due to the Netherlands big import and export, but also due to the physical infrastructure in place (Rotterdam Port, Schiphol Airpoirt), which allows the Netherlands to further transport goods into the rest of Europe, making the Netherlands a major logistical hub. Because the Netherlands is a very small country, but with different entrepreneurial clusters within a 90-minute distance from one another, it allows for networks to connect and knowledge to spill over (EY, 2016; Venema et al., 2016). Furthermore, the Netherlands is one of the most advances ICT economies, and one of the most connected countries in the world, where it ranks third on the number of broadband connections per 100 inhabitants (OECD Factbook 2015-2016, 2016), making the Netherlands extra attractive for high-tech firms and internet ventures (EY, 2016). Additionally, the Netherlands has a well-educated working population, where 76% of the working population has attained upper secondary education (OECD Factbook 2015-2016, 2016) and life-long learning is promoted by schools and universities as well as the government (Venema et al., 2016). From a research perspective, the Netherlands hosts some of the world most finest research institutes, and has various top universities, with a leading number of cited papers from the Netherlands (“Rankings | VSNU,” 2017), which allow for knowledge spill-overs into the local ecosystems and private sector. The Dutch government is very stable and one of the most effective according to Venema et al., (2016). The government has many policies (“The government supports entrepreneurs | Enterprise and innovation | Government.nl,” 2017) in place to support entrepreneurship and attract (inter)national talent and businesses (“Start-up | Immigration and Naturalisation Service (IND),” 2017, “StartupDelta,” 2017). International companies also benefit from an attractive fiscal climate, with a low tax rate over profits (Startup Genome Project, 2017).

China

According to GEM (“GEM Global Entrepreneurship Monitor - China,” 2016), China is an efficiency-driven economy and has a population of 1.357 billion people. China’ GDP is estimated at $1098.2 billion, which comes down to $7.990 GDP Per Capita. SMEs are estimated to contribute 59% to GDP. A broader overview can be seen in Figure 15. China, just like the

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Netherlands, scores above GEM average, except for commercial and legal infrastructure. China also scores high (above 4) in Physical infrastructure like the Netherlands, and in internal market dynamics, which makes it China’s best features. The rest of the scores are either between 2-3 (six) or 3-4 (four).

Figure 15. Entrepreneurial Ecosystem China

Source: (“GEM Global Entrepreneurship Monitor - China,” 2016)

According to GEDI 2017 (Ács et al., 2017), China ranks as number 48 on the GEI of the world best entrepreneurial ecosystems, where it ranks as number seven of its region (Asia-Pacific). An overview can be found in Figure 16. According to the GEDI, China’s strongest area is risk capital (score of 0.89), closely followed by product innovation (score of 0.86). China’s weakest area is opportunity perception, which scores below world and region average. According to the GII, China ranks as number 22 of the world most innovative countries overall and ranks first of the upper-middle income countries (Cornell et al., 2016). According to the WEF (2016), China ranks as the world number 28 most competitive economy on the GCI. China’s primary strength is its market size (which ranks first in this index).

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Although China is not (yet) at the top of all the rankings, the Chinese Government is planning to go there soon. This was expressed in the 13th_{five year plan for economic and social}

development of the people’s republic of china (2016-2020) (Compilation & Press, 2016), where the following is stated: “With innovation as the basis from which to pursue development, we will give a central role to innovation in science and technology and a supporting role to the development of talent, closely integrating scientific and technological innovation with business startups and innovation by the general public in order to achieve leading-edge development that relies more on innovation as its driver and offers greater incentives for first innovators” (Compilation & Press, 2016, p. 22).

Figure 16. GEI score China Source: (Ács et al., 2017, p. 60)

Ferreira & Junqueira (2013) did research among the G20 countries about the level of support it provides for entrepreneurs and ranked the entrepreneurial ecosystem of China in the third quartile of all G20 countries. According to Junkuo (2016), the environment for startups and innovation is now optimized in order to enable mass entrepreneurship and innovation, which is a

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ventures in China are an important part of the economic success of recent years, where 75% of new jobs and around 68% of the country’s export is related to entrepreneurial ventures (Zhou, 2012). As said before, the Chinese internal market is enormous, providing plenty of opportunities for local entrepreneurs. Businesses like Tencent (runs China’s most popular social network WeChat), Alibaba, JD.com and search engine Baidu, have grown into successful businesses thanks to this internal market. Nowadays, China is mainly an efficiency-driven economy, which other brands like Xiaomi, Huawei and Lenovo benefitted from and have expanded towards the international market (“The most valuable brands in China - Business Insider,” 2017, “Top 10 Chinese Entrepreneurs | Investopedia,” 2017). As a rule, one could say that the Chinese ecosystem benefits businesses due to a grand internal market, which enables rapid and large-scale commercialization of new ideas. Businesses that depend on efficiency-driven innovations can benefit from the extensive manufacturing ecosystem, which allows to build a product fast and cheap, with possibilities to scale-up production to grow fast (Roth et al., 2015). Another interesting and appealing feature of the Chinese entrepreneurial ecosystem is the access to funding. Ernst & Young (EY) (2013) state that it is easier to get funding in China than in other rapid growing G20 nations, where venture capital (VC) is more widely available and an above average percentage of GDP is initial public offering (IPO) invested or domestic credit to private sector. The entrepreneurial culture in China is still developing, although entrepreneurship is encouraged in the Chinese culture. Especially since self-made wealth is considered easier nowadays, since the state is withdrawing its role from the state-owned economy, which opens doors for entrepreneurs. Still, the time to start a business and regulations regarding taxation and labor market rigidity do not favor people to start a new entrepreneurial business compared to other G20 countries (EY, 2013). The Chinese government is however planning to improve the environment for entrepreneurs and smoothen regulations in order to encourage entrepreneurship (Compilation & Press, 2016). Since the working population is expected to decline in the coming years, the government focus is shifting from an efficiency-driven economy towards an innovation-driven economy. Therefore, it is important to foster a well-educated workforce and foster human capital. The Chinese have a few top universities, and the number of people enrolled in secondary and tertiary education is rising (WEF, 2016), still the number of cited publications and co-authored articles is lagging behind. The Chinese government has introduced policies and

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mechanisms to foster Chinese talent and bring them back from employment abroad (EY, 2013; Roth et al., 2015) to boost human capital and national innovation.

Comparison of GEM data

Figure 17. GEM Comparison Ecosystems the Netherlands and China

Table 6. GEM Comparison Ecosystems the Netherlands and China

Pillar Netherlands China

Financing for entrepreneurs 3,29 3,32

Governmental support and policies 3,19 3,14

Taxes and bureaucracy 3,38 2,89

Governmental programs 3,40 2,66

Basic school entrepreneurial education and training 3,28 2,04 Post school entrepreneurial education and training 3,57 3,17

R&D transfer 3,18 2,49

Commercial and professional infrastructure 3,49 2,58

Internal market dynamics 3,46 4,24

Internal market openness 3,67 2,66

Physical and services infrastructure 4,69 4,33

Cultural and social norms 3,77 3,47

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Comparison of GEI data

Figure 18. GEI Comparison Ecosystems the Netherlands and China

Table 7. GEI Comparison Ecosystems the Netherlands and China

Pillar Netherlands China

Opportunity perception 0,87 0,13 Start-up skills 0,90 0,15 Risk acceptance 0,82 0,52 Networking 0,77 0,49 Cultural support 1,00 0,27 Opportunity start-up 0,96 0,26 Technological absorption 0,76 0,21 Human capital 0,38 0,44 Competition 0,81 0,25 Product innovation 0,67 0,86 Process innovation 0,79 0,67 High growth 0,51 0,61 Internationalization 0,61 0,26 Risk capital 0,66 0,89 Source: (Ács et al., 2017)

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Discussion

According to the GEM data comparison, the Netherlands and China show only slight differences in their entrepreneurial ecosystems. These differences can be explained since the Netherlands has a more evolved and developed entrepreneurial ecosystem. The Dutch have a rich history of entrepreneurial thinking and entrepreneurial ventures, dating back to the time of the Vereenigde Oostindische Compagnie (VOC) (van der Zwan, Hessels, Hoogendoorn, & de Vries, 2015). One could argue that China is gaining momentum on the Dutch, due to the fact that China has a less developed ecosystem, but is (according to the GEM experts) trailing the Netherlands in their performance of entrepreneurial output (Global Entrepreneurship Research Association, 2016). Furthermore, the Netherlands is reliant on entrepreneurship and on entrepreneurial activity since it is a small country. The Dutch rely on trade and cultivate expertise in various fields to export over the rest of the world (Straathof, Linders, Lejour, & Jan, 2008). Therefore, the Dutch have had time to manage the (entrepreneurial / innovative) environment and shape it in a way that favours the nation, which can be seen in the GEM analysis. The physical and service infrastructure, which is one of the best according to all indexes used in this research (Ács et al., 2017; Cornell et al., 2016; Global Entrepreneurship Research Association, 2016; WEF, 2016) combined with an internal market openness, commercial and professional infrastructure and internationally friendly environment makes the Netherlands attractive for entrepreneurs and entrepreneurial ventures. The ecosystem scores high above average on all pillars, although the financing climate in the Netherlands is considered one of its flaws.

According to the GEM data comparison in Figure 17 and Table 6, the entrepreneurial ecosystem of China is not yet that developed as that of the Netherlands, although some Chinese regions or entrepreneurial clusters like Beijing and Shanghai are already among the top regional entrepreneurial ecosystems around the world. The Chinese government has plans to further develop the Chinese entrepreneurial ecosystem as a whole and develop other regions as well with policy focussed on mass entrepreneurship and innovation (Xiaoqiang et al., 2016b). Although the Chinese government has introduced its mass entrepreneurship and innovation policy (“China boosts mass entrepreneurship and innovation,” 2017), the GEM data suggests that that China still lacks in governmental programs in the ecosystem, although the policy is in place. The Chinese manufacturing ecosystem is top notch, and serves both national and international markets.

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However, the Chinese could benefit from a more open market which will increase competition and therefore make the market more interesting for other businesses to enter. Since the market is not (yet) that open, there are high barriers to enter (examples of wrong entries: Uber, Facebook), and the Chinese government has certain ways to block competitors and favour Chinese ventures to capture the market (Zhao & Pira, 2013). Furthermore, the GEM data is showing that China is lagging in the education pillar, which ultimately influences R&D transfer. Therefore, China is looking to further strengthen its education system, since it will positively influence other pillars, like the R&D transfer, commercial and professional infrastructure, and the retention of talent in China. This should lead to a more developed ecosystem, where China and Chinese companies will be less depending on science and technology from abroad, and will be able to produce this knowledge themselves, further strengthening the ecosystem.

One should keep in mind that the GEM data on the entrepreneurial framework conditions (EFCs) is an assessment made by experts on a 5-point Likert scale. Therefore, the outcomes of the GEM data are expert opinions on a standardized questionnaire about countries. The data on the adult population survey (APS) is a weighted average of questionnaires among people to explore the role of the individual in the lifecycle of the entrepreneurial process, where the focus is (besides the business characteristics) on motivations, actions and attitudes (Global Entrepreneurship Research Association, 2016).

The GEI data in Figure 18 and Table 7 is showing considerably larger differences when comparing the entrepreneurial ecosystems; not just the internal measurement (GEI) but also compared to the GEM data. This might partially be explained due to the structure of both databases and their dependence on information from various sources. The GEM scores on the ecosystem rely on an expert panel (Global Entrepreneurship Research Association, 2016), while the GEI relies on measured variables. The overall GEI score of the Netherlands is 68 percent, where 64 percent is contributed by the individual score and 90 percent from the institutional score. The overall GEI score of China is 36 percent, where 59 percent is contributed by the individual score and 56 percent from the institutional score. These scores indicate that (reliable) information is more readily available in the Netherlands than it is in China. Although there might be bigger differences, this data also shows some characteristics of both ecosystems that should sound familiar by now. China scores high in risk capital, which supports the understanding of the

Entrepreneurial ecosystems : a comparison between the Netherlands and China : unique attributes of the respective ecosystems, what makes them work?

Preface

Abstract

Table of Contents

List of Figures

List of Tables

List of Abbreviations

Introduction

Background

Methods

Results

Discussion