EXPLORING THE ROLE OF THE INDIVIDUAL WITHIN ENTREPRENEURIAL ECOSYSTEM THEORY
Student: K.G. Dwarshuis (S2206293) Supervisor: Dr. O. Belousova
Co-assessor: Dr. S.M. Costa
MSc Business Administration – Small Business & Entrepreneurship Master’s Thesis BA SB&E
Word count: 30.234
University of Groningen June 2018
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Abstract
Through drawing inferences from the more developed field of Innovation Ecosystems, this study proposes several ways in which individual actors within an Entrepreneurial Ecosystem -here referred to as Regional Champions, effectuate or are important for entrepreneurial success. By means of a multiple-case study conducted in the MVO-Ecosystem of Groningen, it is found that Champions do so through overcoming firm-specific barriers impeding venture development and by tailoring the regional attributes on behalf of a subsection of entrepreneurial endeavors within a region.
This study therefore proposes a novel individualistic perspective in a literary field primarily concerned with creating generalizable models of higher-order categorizations. Doing so furthermore yielded several theoretical and governmental implications. Most importantly, it is proposed that Entrepreneurial Ecosystems should be understood as pertaining to a specific subsection of the regional economy, informing governmental authorities to cooperate with Regional Champions knowledgeable of the unique barriers to venture development persistent in each of these sub- ecosystems.
Keywords: Entrepreneurial Ecosystem; Regional Champion; Social Capital; Barriers; Regional Attributes.
Acknowledgements
My sincere gratitude goes out to Olga Belousova for her thoughtful feedback and contributions throughout the development of this paper, and to Sílvia Costa for the improvements she recommended in the final week. I would furthermore like to applaud the remarkable willingness with which all interviewees devoted their personal time to share their stories. And lastly, I would like to thank Anja Admiraal for the emotional support she so readily provided during the last stages of this study.
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Table of Contents
1. Introduction ... 4
2. Literature Review ... 6
2.1 Schematizations of the Entrepreneurial Ecosystem ... 8
2.2 The role of the individual within the Entrepreneurial Ecosystem... 10
2.3 Exploring the Innovation Ecosystem literature ... 11
2.4 Lessons from the Innovation Ecosystem literature ... 12
2.4.1 Champion Emergence ... 13
2.4.2 Partitions within the Ecosystem ... 14
2.4.3 Organizing Coalitions ... 15
2.5 Proposing a model for Champion Importance ... 16
3. Methodology and Research Approach ... 18
3.1 Data Collection ... 19
3.2 Data Processing ... 20
4. Data Analysis and Findings ... 21
4.1 Champion behavior within an Ecosystem ... 21
4.2 Factors relating to Champion Importance ... 24
4.2.1 Champion importance as described by Eric Wams ... 25
4.2.2 Champion importance as described by Jan Willem Wennekes ... 26
4.3 Findings from the cross-case analyzes ... 28
4.3.1 Importance through overcoming barriers ... 29
4.3.2 Importance through shaping regional attributes ... 30
4.3.3 Champion Prominence ... 32
5. Discussion ... 33
5.1 Answering the research questions ... 33
5.2 Answering the main research question... 38
5.3 Embedding the findings within the existing literature ... 43
5.4 Theoretical Implications ... 45
5.5 Practical Implications ... 47
5.6 Limitations and future research recommendations... 49
6. Conclusion ... 51
7. Bibliography ... 54
8. Appendix ... 56
Section A: Entrepreneurial Ecosystem schematizations ... 56
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Section B: Finding potential Regional Champions ... 58
Section C: The interview guide ... 60
Section D: Champion importance as described by the interviewees ... 68
Champion importance as described by Gaaike Euwema ... 68
Champion importance as described by Noor van Leeuwen ... 69
Champion importance as described by Amber ten Brummelhuis ... 70
Champion importance as described by Jaap de Vries ... 72
Champion importance as described by Roelof de Vries... 73
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1. Introduction
In recent years, Entrepreneurial Ecosystem theory has come under the attention of political leaders as pragmatic tool for the development of local regions. The core of this literature is formed by the idea that entrepreneurial success is influenced by the collection of interconnected entrepreneurial actors, entrepreneurial organizations, institutions, and entrepreneurial processes within a region that formally and informally interact (Mason and Brown, 2013). Or with other words, Entrepreneurial Ecosystem theory holds that the development and performance of new business ventures is significantly affected by the unique environment in which the entrepreneur operates, and the connections he or she has with other actors in the field.
But despite the work that has been done to categorize the most promising local attributes for venture success into higher-order categorizations in so called Entrepreneurial Ecosystem frameworks, only a small body of knowledge is available on the internal dynamics of an ecosystem (Stam and Spigel, 2016). And although a main characteristic of Ecosystem theory is the prominent role played by the individual in shaping its own environment, not much attention has been paid to this mechanism in the existing evaluative frameworks. Rather than exploring the ways in which these actors individually contribute towards their own ecosystem, their totality is seen as constituting one of the regional attributes. This therefore does not allow for a clear differentiation between the multiple entrepreneurial actors within an ecosystem, preventing targeted governmental intervention. One yet to be answered aspect of entrepreneurial ecosystems therefore relates to the various degrees with which actors –here referred to as Regional Champions, play a role within the ecosystem. Attempting to fill this gap in the literature, this study aims to answer the question: “What determines the relative importance of Regional Champions for and within an Entrepreneurial Ecosystem?”
Understanding what makes some actors more influential for the overall success of the ecosystem, or why one Champion is seen as a more prominent player by its peers than others however requires breaking with generally adhered to perceptions and frameworks within the Entrepreneurial Ecosystem literature, and the creation of a new actor-based perspective. This perspective, created using insights from the more developed field of Innovation Ecosystems, perceives the higher-order categorizations of the Entrepreneurial Ecosystem frameworks on the macro-level as a mere result of individual actors on the micro-level. So rather than grouping individuals within the ecosystem under a common category and labeling them as one of the regional attributes, this perception perceives individuals as the ones forming these attributes, and therefore the ecosystem as a whole.
5 Using this understanding, a model is proposed that holds that Champions derive importance for and within the ecosystem based on the barriers they help to overcome, and/or the coalitions they form with other actors in the field. A qualitative study into the entrepreneurial ecosystem of Social Enterprises in the city of Groningen corroborated and extended upon this proposed model.
The main results of this study are as follows. First, it was discovered that Champions derive importance as they either overcome specific barriers impeding venture development or refer to others with the required expertise to do so based on their connections within the local social capital.
Champions furthermore support each other’s efforts, share knowledge and tools, and ‘recruit’
previously inactive individuals within the ecosystem to become part of this network and thereby expand the wealth of abilities available to overcome barriers. In addition, Champions were found to actively tailor the regional attributes to favor the specific subsection of entrepreneurial endeavors they champion for. This also entails however that the idea of an ecosystem schematization accurately reflecting the general ease with which a generic entrepreneur can successfully set up an enterprise within a specific region should be re-evaluated. Instead, it is proposed that entrepreneurial ecosystems might be better understood as not only pertaining to a specific region, but also to a specific sector or cause fostered by a collection of Champions.
This research furthermore yielded several recommendations for governmental agencies. First, the understanding that ecosystems pertain not only to a region but also to a specific industry or cause with its own set of firm-specific barriers impeding venture creation implores governmental agents to stop trying to design the next big hit by replicating regulations and stimulations of other successful regions; a mistake often made (Mason and Brown, 2013). Instead, governments are advised to understand the barriers to be overcome as unique constellations, demanding inimitable answers.
Governmental agencies attempting to benefit an entrepreneurial ecosystem should therefore target their efforts specifically on overcoming the local barriers of a selected entrepreneurial sector in cooperation with the Regional Champions, or improve the more generally applicable regional attributes rather than merely replicating ‘best-practices’ from other cities. Governmental institutions should furthermore aim to facilitate and consolidate the network of Champions operative within a local region, enhancing their ability to overcome firm-specific barriers and tailor the regional attributes.
The model furthermore provides some insight into the identification of influential actors for the success of business ventures within an ecosystem, allowing governmental agents to help ensure the continuation of their efforts. This is important as with the understanding that ecosystem attributes
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are created and sustained by the efforts of a select group of Champions, the system as a whole has become much more fragile than previously perceived.
The remainder of this paper is structured as follows: the next chapter provides a more thorough explanation of the ecosystem concept, but also delineates the shortcomings of the currently used ecosystem models. This is followed by arguments in favor of a new actor-based perspective of ecosystem creation, constructed using the related literature on Innovation Ecosystems. This novel understanding of ecosystem creation is used to develop a model explaining the relative importance of Regional Champions, which is then tested in a qualitative case-study. Lastly, the results of this study are discussed and compared to the existing literature, leading to both a set of recommendations for governmental agencies aiming to stimulate the local economy by developing an entrepreneurial ecosystem and a further research agenda.
2. Literature Review
Despite the welcoming characteristic of entrepreneurship and possibility for almost anyone and anywhere to opt to become part of this group of self-employed individuals, it has become clear that levels of entrepreneurial activity are not evenly distributed among geographic regions (Mack and Qian, 2016). Throughout the literature, several reasons for this ‘clustering’ of entrepreneurial activity have been proposed and supported. Differences in local population characteristics such as, for example, age (Curran and Blackburn, 2001), ethnicity (Wilson and Martin, 1982), and gender (Langowitz and Minniti, 2007), are found to play a role in this heterogenic distribution as they influence the start-up and survival rate of new enterprises. Other such reasons for this grouping are the knowledge spillovers or externalities present when ventures cluster together (Audretsch and Thurik, 2004), the effects of regional specialization (Campi et al., 2004), path dependency (Holcombe, 2007), and the quality of networking activity in regional environments (Mack and Qian, 2016).
But in addition to looking into the reasons for this uneven distribution of entrepreneurial activity, researchers have begun to explore the characteristics of regions that did become a breeding ground for new enterprises in a more systematic way; attempting to organize the locally interacting components that spur this entrepreneurial activity (Neck et al., 2004). This systemic characterization of beneficial attributes of a local area, referred to as the entrepreneurial ecosystem, therefore places the focus on the environment in which the entrepreneur operates. So instead of seeing the characteristics of the individual or their personal resources and capabilities as determinant for the success and failure of new ventures, this field emphasizes the influence of the unique location in which the entrepreneur operates. And rather than attempting to eliminate environmental influences
7 in order to produce generalizable models, researchers explicitly make the wider setting in which the entrepreneur is active the center of attention (Stam and Spigel, 2016).
Several such environmental attributes that enable the development of new ventures are an easy access to finance, the right mix of human capital, and a supportive local culture. But this focus on external factors is however not exclusive to the Entrepreneurial Ecosystem approach. Industrial Districts (Krugman, 1991), Clusters (Porter 1990; 1998), and Innovation Systems (Freeman, 1987) all share the understanding of external influences on individual firm performance. Yet, despite some overlap between the Entrepreneurial Ecosystem approach and the three mentioned above, there are also substantial differences. First, when it comes to these more traditional models, knowledge is mostly understood as a certain market knowledge or technical know-how that can flow from one company to the next. However, within the Entrepreneurial Ecosystem approach, the main focus is on the know-how needed to become a successful entrepreneur through matters such as knowing where one can get finance, how to design business plans, and how to overcome the liability of newness.
And rather than seeing knowledge as distributed through for example spill-overs, the Ecosystem approach emphasizes the key role mentors and networks play in this regard (Stam and Spigel, 2016).
A second difference is that, within the Entrepreneurial Ecosystem approach, the entrepreneur rather than the firm lies at the center of attention. And because the other frameworks take the firm as main point of analysis, they perceive start-ups as smaller versions of international firms rather than unique entities led by individuals (Stam and Spigel, 2016).
The distinguishing emphasis on the entrepreneur rather than the firm in the Ecosystem approach is furthermore underlined by the perception of entrepreneurs as central players in the creation and sustainment of the system in which they themselves operate; as opposed to seeing
‘entrepreneurship’ as a mere outcome of contextual influences (Feldman, 2014). This role of the entrepreneur in shaping its own environment is underlined by the work of Isenberg (2010), who stresses the role of the private sector in making any entrepreneurial ecosystem a success. In his paper How to Start an Entrepreneurial Revolution, Isenberg argues that the government is unable to build an ecosystem on its own. Successfully orchestrating the development of an entrepreneurial ecosystem therefore requires the early engagement of the private sector through a ‘candid conversation’ on matters as reducing structural barriers and formulating entrepreneur-friendly policies and programs (Isenberg, 2010). Feld (2012) extends on this by saying that the government should take a ‘feeding’ rather than ‘leading’ role, in the sense that it should focus on enabling others to take the lead in shaping the ecosystem.
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So to summarize, the Ecosystem approach distinguishes itself by its focus on the characteristics of a certain environment, and tries to understand how this unique constellation of attributes helps the entrepreneur in acquiring the know-how and resources needed to successfully start and grow a new venture. Furthermore, the Ecosystem approach specifically emphasizes the role played within the ecosystem by the entrepreneur itself, as it perceives the entrepreneur to be the one to shape its own environment. Paraphrasing the words of Andrew van de Ven (1993), it is thus the work of the entrepreneur and other actors on the micro-level that creates the infrastructure of the Entrepreneurial Ecosystem we perceive on the macro-community level.
2.1 Schematizations of the Entrepreneurial Ecosystem
Over the years, several schematizations of the Entrepreneurial Ecosystem concept have been proposed. One such schematization that has gotten a lot of attention comes from Daniel Isenberg (Mason and Brown, 2013). In this schematization, Isenberg argues that there are six domains that together encompass the entrepreneurial ecosystem. These domains are a conducive culture, enabling policies and leadership, availability of appropriate finance, the right mix and supply of human capital, venture friendly markets for products, and a range of institutional supports (Isenberg, 2011). These six domains, interacting in complex and idiosyncratic ways, all benefit the constitution and development of new ventures, and together form the entrepreneurial ecosystem (see appendix section A.1 for a graphical representation).
A second schematization of the ecosystem is proposed by Ben Spigel (2015). Spigel argues that ecosystems are composed out of ten attributes, which can be grouped in either a material, social, or cultural dimension (see appendix section A.2). The material dimension embodies the attributes with a tangible or physical manifestation in the ecosystem such as the presence of a university, the existence of formalized rules, and the quality of local infrastructure. The social dimension embodies the resources that are composed or acquired through the social network within the region. This includes such attributes as mentors and role models, worker talent, and the connections between actors within the ecosystem. Lastly, the cultural dimension embodies the underlying beliefs about entrepreneurship within a region, and is divided in the cultural attitudes towards entrepreneurship and the success stories of local entrepreneurs. This schematization, which contains several aspects also found in Isenberg’s schematization, therefore breaks the reason for success within an ecosystem down into three distinct but intertwined causes.
A year later, Ben Spigel, now in cooperation with Erik Stam, proposes a new schematization of the workings of an entrepreneurial ecosystem based on an earlier paper of Stam (2015). Here, the two authors first make a distinction between systemic and framework conditions. Framework conditions
9 are the formal and informal institutions together with the physical conditions that enable or constrain entrepreneurial action (think of the quality of local infrastructure and the influence of culture). The systemic condition comprises the network of entrepreneurs, leadership, finance, talent, knowledge, and support services, and forms the heart of the ecosystem (Stam and Spigel, 2016) Together, these systemic conditions, which are either reinforced or inhibited by to quality of the framework conditions, support entrepreneurial activity in a certain region (see appendix section A.3).
And these three are only the first of a quite substantial and ever growing list of evaluative frameworks. Other often used frameworks are the Babson Entrepreneurship Ecosystem Project; the Asset Mapping Roadmap of the Council on Competitiveness; and the Entrepreneurship Ecosystem model from the World Economic Forum (ANDE, 2013). However, these models are chiefly evaluative frameworks and therefore, in essence, merely list several elements that exist within an Entrepreneurial Ecosystem. Or with other words, these perspective look at the fertile ground in which new ventures find ample resources to grow, and try to identify those resources and regroup them in higher order categorizations such as a ‘cultural dimension’ or ‘institutional supports’. The benefit of such an approach is that it clearly demarks areas for improvement, which is quite convenient when one for example desires to be able to target specific segments for governmental intervention. However, although understanding these elements is valuable, it does not give any guidance on the importance of the individual actors within an ecosystem or the things they accomplish. Even the latest model of Stam and Spigel (2016) that explicitly acknowledges the importance of leadership and connections between entrepreneurs, merely sees the individuals within an ecosystem as another element that can be ranked in its entirety, and provides no substantial basis for differentiation between them much like the other frameworks.
In a similar vein, Spigel (2015) states that “research on ecosystems risks devolving into simple description of successful regions without any claim to more generalizable findings about the ecosystem’s internal dynamics or its role in economic development” (p.19). He further argues that there is a need for a dynamic perspective that tries to capture how the structure and influence of an ecosystem changes over time in response to for example “the concerted philanthropic or organizational efforts of a few ‘ecosystem entrepreneurs’” (p.19). So although I do not necessarily disagree with the above proposed methods of indexing beneficial attributes for entrepreneurial success within a region, these models do seem to lack a more profound understanding of the achievements of the individuals within the Ecosystem, and the varying degrees thereof.
To better understand the mechanisms that determine the individual importance of such ecosystem entrepreneurs- as will be the aim of this paper, and in in that process gain more insight into the
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development of these ecosystems over time, it might thus prove useful to look beyond the frameworks that leave no room for differentiation between individual actors and return to an understanding of Entrepreneurial Ecosystems that focuses on the role played by the individual.
Constructing this understanding however requires revisiting the role of the individual within Entrepreneurial Ecosystem theory, and drawing inferences from the more developed theory of Innovation Ecosystems on the ways in which individuals can distinguish themselves.
2.2 The role of the individual within the Entrepreneurial Ecosystem
Signaling the importance of the individual within an ecosystem, Stam and Spigel suggest that a
“successful ecosystem necessitates leadership, consisting of a strong group of entrepreneurs who are visible, accessible and committed to the region being a great place to start and grow a company”
(2016, p.6). And despite the lack of focus on individual actors within the evaluative frameworks, Stam and Spigel’s belief is not unusual within the Ecosystem literature. Rather, it aligns with the existing tradition of seeing entrepreneurial ecosystems as actor driven (Spigel, 2015; Feldman, 2014) and depending on the involvement of the private sector (Isenberg, 2010). The importance of these individual actors is furthermore empirically corroborated by the findings of Feldman and Zoller (2012). Following their quantitative research, these authors conclude that the degree of new venture creation is significantly affected by the anatomy of local social capital; which is understood not as the size of regional networks, but as the efforts by a select group of key individuals in the entrepreneurial environment.
These individuals, referred to as dealmakers, are described as well-known accomplished actors that support the development of new enterprises, and “organize locally embedded social capital to form the backbone of the regional entrepreneurial economy” (Feldman and Zoller, 2012, p. 26).1 Although the precise mechanism for the causal effect dealmakers have on the start-up rate of new ventures could not be determined through their method of study, the authors argue that through sharing their expertise, information, and resources among entrepreneurs and investors, these dealmakers play a central role in mediating, shaping, and configuring the regional entrepreneurial network (Feldman and Zoller, 2012). Their study furthermore not only leads them to conclude that the presence of such dealmakers is correlated with an increased start-up activity, but is also a stronger predictor of a vibrant regional activity than both the size of the entrepreneurial economy and number of entrepreneurs or investors (Feldman and Zoller, 2012). And lastly, Feldman and Zoller also hold that besides the role of the dealmaker, there may be other individuals such as public officials, and non- profit and community leaders that assume a ‘stewardship’ role in the regional economy. In a later
1Feldman and Zoller (2012) define a dealmaker in their empirical analysis as an experienced actor who possesses fiduciary responsibility for four or more entrepreneurial firms.
11 paper, Feldman (2014) calls these actors taking a stewardship role the ‘Regional Champions’, and reaffirms the notion that entrepreneurs not only benefit from their local community, but are also the agents that transform these local communities over time.
So whether you prefer to name them Ecosystem Entrepreneurs (Spigel, 2015), Dealmakers (Feldman and Zoller, 2012), or Regional Champions (Feldman, 2014) -as will be done in the remainder of this paper, Entrepreneurial Ecosystem theory reserves a substantial role for the actions of certain individuals in shaping their own ecosystem.2 This focus on the individual shaping its own environment, which also distinguishes Entrepreneurial Ecosystem theory from the other context- based theories, therefore allows for the differentiation between actors based on the role they play in the development of their ecosystem. Or with other words, the role and importance of the individual for the ecosystem seems to be related to the extent in which these Regional Champions create an environment conducive to new ventures. As however little research is conducted into exactly how these individuals develop their ecosystem, and therefore how they would differentiate in doing so, we need to borrow some insights from the field of Innovation Ecosystems.
2.3 Exploring the Innovation Ecosystem literature
Ron Adner defines Innovation Ecosystems as “the collaborative arrangements through which firms combine their individual offerings into a coherent, customer-facing solution” (2006, p. 2). Adner uses the inability of HD-TV producers as Philips and Samsung to successfully market their consoles in the early 1990’s to explain that, without other actors in the ecosystem enabling and supporting your value to the customer, your product will fail. Simply because the other actors were not ready for this new development, being the content producers with older production equipment and the lower broadcasting standards still adhered to in TV-stations, this new product did not translate into value for their customers. This lack of congruency between actors in the same ecosystem therefore inhibited the ability to increase consumers satisfaction through better TV’s, and thus halted the success of this product several years. Adner therefore holds that the success of the one is dependent on the others in its ecosystem.
Autio and Thomas (2014) further explain that the defining element of an ecosystem, or the element that identifies what belongs to the ecosystem and what falls outside of it, is not a particular product that is being developed. Instead, these authors argue that one should not think of an Innovation
2 As the current literature still seems inconclusive as to specifically which kind of individuals can belong to this group (ranging from all entrepreneurs within a region to a select group of well-known accomplished actors and back to anyone taking a stewardship role), this explorative study will understand a ‘Champion’ in the broadest definition possible. Such behavior is therefore not restricted to the entrepreneurs themselves, but can also be done by for example individuals within governmental or non-governmental organizations.
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Ecosystem as a certain industry, but as an evolving community focused on the “development, discovery, delivery, and deployment of evolving applications that exploit a shared set of complementary technologies and skills” (Autio and Thomas, 2014, p. 6). So to translate this to the example of HD-TV’s, that ecosystem is not necessarily structured around those new TV’s. Instead, the ecosystem comprises all the different actors that try to exploit the shared set of complementary ‘HD- imaging and processing’ technologies, in the attempt to develop, discover, deliver, and deploy ever evolving applications based on this technology (such as e.g. HD camera’s, HD broadband channels, HD cables, HD TV’s, and HD movies and documentaries), and together create a coherent, customer- facing solution. So comparable to the Entrepreneurial Ecosystem where all entrepreneurs rely on the publicly shared attributes of a location to successfully develop new ventures, the successful introduction of new products and services by Innovation Ecosystem actors depends on a shared set of complementary skills and technologies.
And just as within the Entrepreneurial Ecosystem, there is a special role to be played by the Champion within the Innovation Ecosystem; in this instance referred to as the Innovation rather than the Regional Champion. The task of this Champion is to (1) express enthusiasm and confidence about the success of the innovation, (2) persist under adversity, and (3) getting the right people involved (Howell, Shea, and Higgins, 2005). And although it is clear that the context of the Innovation Champion relates to one particular technology or can even concern one particular project within a firm, and the context of the Regional Champion is the wider Entrepreneurial Ecosystem (which in itself could encompass one or several Innovation Ecosystems), these three mentioned aspects of a Champion remain the same.
Just like any entrepreneur, Innovation Champions need to confidently pursue the success of their idea, persist under adversity, and benefit from getting the right people involved. But more specifically, based on this description, Regional Champions align with the idea of Innovation Champions in the sense that they are (1 & 2) “committed to the region being a great place to start and grow a company” (Stam and Spigel, 2016, p. 6) and (3) “organize locally embedded social capital to form the backbone of the regional entrepreneurial economy” (Feldman and Zoller, 2012, p. 26).
2.4 Lessons from the Innovation Ecosystem literature
So when it comes to both the dependency of actors on (others in) their environment, and the roles played by the Champion, there is a certain compatibility between the Entrepreneurial and Innovation Ecosystem approach. The more developed literary work on Innovation Ecosystems, or the work done in the Innovation Champion literature in specific, could therefore provide some insights relevant for the development of an actor-based perspective on Entrepreneurial Ecosystems; helping in answering
13 the main research question concerning the factors relating to the relative differences in Champion importance for the success of entrepreneurial ecosystems.
2.4.1 Champion Emergence
A first inference that can be drawn from this literary field for the creation of a renewed entrepreneurial ecosystem understanding relates to the way Champions emerge. Within the Innovation Ecosystem literature, Champions can join or arise within, but also leave the ecosystem as time passes. This notion is put forward by the work of Klerkx and Aarts (2013) who draw upon the same Innovation Champion literature as is used within an Innovation Ecosystem context. The underlying reason proposed by these authors for the emergence of Champions within the ecosystem is that they arise due to their ability to overcome certain challenges (such as administrative and bureaucratic barriers, or a lack of technical knowhow).
If such a challenge appears, Klerkx and Aarts hold that there might be individuals with the required characteristics, connections, or experiences (e.g.) to overcome this barrier. And when these individuals take up the task to tackle this challenge, they become known as Champions. Translating this to the field of Entrepreneurial Ecosystems would mean that Regional Champions emerge as they help others overcome their barriers to venture constitution or development. Or with other words, individuals that enable others to start or grow a company by helping them overcome their barriers for doing so (unknowingly) become ‘Regional Champions’, simply by the virtue of doing so. This Champion emergence based on helping others overcome their barriers for venture creation is therefore in line with the distinguishing feature of Entrepreneurial Ecosystem theory, as it is the individual who creates his or her own environment, and it is this environment that is believed to benefit entrepreneurial success.
Extending this line of reasoning would therefore furthermore mean that the regional attributes, which are essentially nothing more than already available answers to the problems people trying to start or grow a new venture might run into, result from the continued effort or Regional Champions.
So, instead of classifying elements of the environment in higher-order categorizations as in the previously mentioned more evaluative ecosystem schematizations, one could also see the existence of these elements as the achievements of the ecosystem’s Champions. Or with other words, one could argue that it is the Champion who creates the regional attributes on the micro-level that subsequently get grouped and categorized on the macro-level by the more evaluative frameworks.
One could for example see it as the achievement of a Champion that new firms who would be struggling to get funding can easily access finance sources tailored to their needs. Or one could see
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the prevalent culture as resulting from the efforts of several Champions to organize events, embrace failures, and tell success stories. And when one also includes public officials and all other non- entrepreneurs assuming a stewardship role for their regional economy as Champions, you could even see a civil servant drafting beneficial legislation as a Champion developing the entrepreneurial environment.
More important Champions would in that sense be those instrumental in overcoming a more prominent or detrimental barrier to venture creation or growth, or those overcoming a barrier that is persistent over time. On the other hand, Champions of smaller importance for the success of the ecosystem are those overcoming a simpler or more temporary barrier. This therefore results in a certain stratification within the ecosystem where some actors are more important, or contribute more towards the attributes of the ecosystem, than others.
This understanding furthermore also provides for a dynamic component; something required for developing a more accurate understanding of an entrepreneurial ecosystem as argued by Spigel (2015). When the barrier is only of temporary nature, the services of the Champion might no longer be needed after a while and he or she will no longer be recognized as a Champion. On the other hand, when an actor allows for overcoming a more permanent problem, he or she might be a Champion for a considerable amount of time. Following this line of thought, it is therefore proposed that helping others overcome their barriers to venture creation distinguishes the Regional Champion from other actors in an ecosystem, and that Champions who overcome a more detrimental barrier, or a barrier of a longer temporal nature impeding venture creation or growth, will be seen as more important for the ecosystem than Champions who overcome simpler or more temporary barriers.
2.4.2 Partitions within the Ecosystem
A second insight helpful to the understanding of the relative importance of Regional Champions is also touched upon briefly by Klerx and Aarts (2013). These authors argue that next to the size or temporal nature of the barriers Champions are able to overcome, (Innovation) Champions also vary in whether they contribute to a primary or secondary innovation community. What the authors mean by this is that, on the business-level context, Champions can either contribute to the development of the main innovation, or contribute to tasks that are related to this main innovation.
These sub-communities are in this regard understood as “connected to specific sub-trajectories within the overall innovation” (Klerx and Aarts, 2013, p. 208). And although Entrepreneurial Ecosystems or Regional Champions are not necessarily concerned with innovation communities- be it primary or secondary, it can be surmised that there is a possible division in importance to be made based on the field in which the Champion is operative.
15 Placing this in an Entrepreneurial Ecosystem context would then create the understanding that there can exist several sub-ecosystems within a larger, all encompassing, ecosystem. This distinction between the larger ecosystem and several smaller ecosystems within it was also recently proposed in a paper by Ken Harrington (2017). In this work, Harrington describes the development of the ecosystems present in Kansas City and St. Louis. And based on his involvement in these two ecosystems, Harrington argues that, over the years, the ecosystems in both cities have developed several sub-ecosystems. So, for example, within an ecosystem witnessing an overall quality of regional attributes, there can form a network of actors that focus their efforts specifically on enabling and growing new art ventures. These sub-ecosystems thus tailor to the needs of a specific group of entrepreneurs (those making and selling art) within the larger collection of entrepreneurs present in a certain area. And all that is needed for such a sub-system to come into existence, according to Harrington, is a group of formerly unconnected entrepreneurs sharing a similar interest who are willing to devote their energy to the creation of attributes that specifically favor their niche within the ecosystem.
This distinction between the larger ecosystem and the smaller sub-systems that can exist within it is first and foremost important because it allows for a more correct understanding of the inner workings of an ecosystem, as this partitioning is not identified within the existing Ecosystem frameworks. However, it also leads to the proposition that Champions not only vary in importance based on the barriers they are able to overcome, but also based on the group of (potential) entrepreneurs they overcome these barriers to venture creation and growth for. An actor creating a culture more conducive to entrepreneurial aspirations for the entire ecosystem would in that sense be more important than someone doing the same for a small group of people. Or in a more general sense, someone allowing for overcoming ecosystem-wide barriers is expected to be seen as more important for the creation of regional attributes and the overall success of the ecosystem than someone who provides a comparable service but to a smaller number of people.
2.4.3 Organizing Coalitions
The above two propositions relate either the capacity of the Regional Champion to overcome barriers impeding venture creation and growth, or the group of people for whom this barriers is to be overcome to a Champion’s importance within the ecosystem. However, based on the third characteristic of a Champion of ‘getting the right people involved’ (Howell, Shea, and Higgins, 2005) or organizing locally embedded social capital (Feldman and Zoller, 2012), a third variable for Champion importance can be constructed: the ability to organize coalitions.
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Knowing the right people and getting them involved with you allows for an enhanced ability to overcome the barriers of others in the ecosystem, and therefore in general will allow for a greater contribution to the regional attributes. This therefore can in a more narrow sense mean simply being firmly embedded in the network of Regional Champion, and therefore being able to refer entrepreneurs to other Champions that can help them overcome their barriers for them when you yourself cannot. But it can in a wider sense also be understood as actively forming a cohesive group of Champions “committed to the region being a great place to start and grow a company” (Stam and Spigel, 2016, p. 6).
‘Getting the right people involved’ can furthermore also be seen as the ability to persuade previously inactive individuals to become active within the ecosystem -referred to as Chains of Championing (Klerx and Aarts, 2013). So next to referring entrepreneurs to other Champions enabled by your embeddedness in the local network, the act of forming or just being part of a coalition of Champions would also lead to greater importance for and within the ecosystem. It is therefore proposed that being embedded in the local social capital, or creating and being part of a coalition of Champions is a third mechanism with which Champions differentiate in importance.
2.5 Proposing a model for Champion Importance
Looking at it from a different perspective, the previous propositions relating to Champion importance can also be understood in the following way. Merely living within a geographic area does not make you a Champion within the local entrepreneurial ecosystem. Rather, it takes a certain effort, or action from your side, to distinguish yourself as Champion; you need to do something. And ‘doing something’ in this regard can only be understood, in the end, as contributing to the attributes that allow for a greater conduciveness in venture creation and growth. Because after all, that is all an Entrepreneurial Ecosystem ever is. Therefore, to be a Regional Champion is to be someone who enables others to attain the resources or knowledge needed to grow. Or put differently, to be a Regional Champion is to be someone who helps others in overcoming the barriers that impede the creation or development of their venture.
This understanding therefore does not merely perceive the entrepreneurial ecosystem to be a schematization or higher-order classification of beneficial attributes of a unique environment. Quite the contrary, this understanding perceives the ecosystem as a macro-level result dependent on the activities of the individual contributing on the micro-level. And using this perspective, it is argued that the importance of the individual Champion relates to the barriers he or she is able to overcome, the group of people for whom this barriers is overcome, and the extent to which the Champion
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Figure 1: Model for Champion Importance
organizes locally embedded social capital in the effort to do so. And by performing these actions, the regional attributes that together create an Entrepreneurial Ecosystem are created.
Figure 1 depicts these proposed mechanisms leading to champion importance in a graphical way.
First, there is a direct relationship between overcoming barriers for others and the contribution to, or importance for, the ecosystem. This relationship is however influenced by two factors. First, there is the nature of the barrier that is to be overcome. This can either be the rarity of resources needed (e.g. experiences and abilities) to overcome a barrier, and the temporal nature of the barrier. More important actors would therefore not necessarily just be those dedicating copious amounts of time and energy towards overcoming barriers and in doing so spur the growth of their own Entrepreneurial Ecosystem, but can also be those who possess a particular set of skills needed to overcome this barrier. Concerning the temporal nature of a barrier, it is argued that overcoming a long-standing or even continuous impediment to venture creation and growth contributes more to the overall success of the ecosystem than overcoming a short-lived one, resulting in a greater importance for and within the ecosystem. The relationship between overcoming barriers and the importance of a Champion for the creation and success of an Entrepreneurial Ecosystem is furthermore influenced by the group of people for whom this barrier is overcome. The larger the group of people for whom the barrier is overcome, the more impactful overcoming this barrier will be for the importance of a Champion within an ecosystem.
Additionally, importance can also be derived from bringing in additional players, or forming a coalition united around the purpose of developing the ecosystem. This can, in and of itself, be seen as increasing the importance of the Champion within the ecosystem as it increases name recognition and awareness by others, but based on the literature it can also be argued that being embedded in the local social capital, or being part of a coalition, in the end allows for an enhanced ability to overcome barriers to venture creation.
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This could even mean that individuals without any skills to overcome barriers of their own would be able to contribute to the entrepreneurial ecosystem by organizing locally embedded capital and by doing so allow for barriers to be overcome by others. As there are however quite possibly also several other reasons for the variation in importance of Regional Champions for the ecosystem which, as of yet, cannot be deduced from the consulted literature, the model might be expanded upon as result of the qualitative study.
3. Methodology and Research Approach
Exploring the ways in which Champions contribute and become of importance for the entrepreneurial ecosystem requires a qualitative rather than quantitative study as it asks for an understanding of underlying relationships (Eisenhardt, 1989). Due to the small extent of knowledge available on this topic, and quite frankly due to the relative small amount of research done into the construction of an entrepreneurial ecosystem over time in general, this study will take the form of explorative research. Within such research, the main objective is to identify and explain relationships rather than to find support for existing hypotheses (Baarda, de Goede, Teunissen, 1995). But although such as study entails a ‘testing attitude’ where the research approach is continuously developed throughout the process of unearthing new insights, some concepts and processes can already be defined and given shape.
As a complex phenomenon is studied where a holistic approach is required to understand what determines the importance of Regional Champions for an ecosystem, a process-oriented multiple- case study approach is used with a focus on several individuals (Baarda, de Goede, Teunissen, 1995).
The benefit of doing such a multiple-case study is that it allows for cross-case comparison of similarities and differences and thus helps in the development of propositions (Eisenhardt 1991).
Discovering and exploring the ways in which individual Regional Champions can distinguish themselves and become of importance for and within the ecosystem furthermore requires a well specified entrepreneurial field with several actors known to take such a stewardship role in their environment. This study will therefore be confined to the city of Groningen, and focuses on the ecosystem of social and environmental oriented enterprises and organizations. In Dutch, this therefore relates to ‘Maatschappelijk Verantwoord Ondernemende bedrijven’ (from here on referred to as MVO’s).3
3 Social and MVO ventures will be seen as falling under the same sub-ecosystem as they are comparable to such an extent that it is expected that they reap comparable benefits from Championing behavior.
19 The Entrepreneurial Ecosystem is defined in accordance with Stam and Spigel (2016) as “a set of interdependent actors and factors coordinated in such a way that they enable productive entrepreneurship within a particular territory.” Productive entrepreneurship is understood by these authors as the work of ambitious entrepreneurs, where ‘ambitious’ encompasses more than simply being your own boss and entails the attachment to success and increasing the performance of your venture. This outcome-oriented understanding of entrepreneurship however does not interfere with the ideology of MVO ventures who believe one can both contribute something to society (by for example hiring mentally challenged employees or helping refugees to integrate) and make a profit by doing so. Understanding ‘success’ in a broader sense than monetary gains therefore does not disqualify them from the definition of productive entrepreneurship, as these ventures still strive to increase both turnover and their impact on society.
A clear definition of a Regional Champion however comes with some difficulty as it requires the distinction between actors who merely invest in their community because they are ‘doing their job’
(think of someone working in the financial service industry), and those who undertake their actions out of compassion and enthusiasm for their environment. Following Feldman (2014), Regional Champions in this study will therefore be defined as those with an attachment to place and community and act out of altruistic rather than short-term profit maximizing behavior. It should be noted however that even the actions done out of self-interest or without any compassion for the ecosystem can help others overcome the barriers impeding venture constitution and growth. This definition furthermore also leaves room for the inclusion of the private sector, as argued by Isenberg (2010). Combining the above two definitions results in the search for interdependent actors with attachment to place and community operating in an altruistic manner, and in doing so enable and support MVO ventures within the city of Groningen.
3.1 Data Collection
Collecting participants for this study is done through contacting eight MVO’s in Groningen and asking them to identify individuals, firms, or institutions that benefitted them in their venture creation.
Additionally, two organizations –being Social Enterprise NL and the MVO-Alliantie Noord Nederland, have been asked which actors they deem important for the success of the MVO-Ecosystem in Groningen. Based on these responses, several potential Regional Champions have been identified and contacted. In total, seven interviews were conducted with individuals from several sections of the ecosystem. Table 1 provides an overview of these interviewees, and a further exploration of the ways in which these potential Champions have been identified and their role within society can be found in section B of the appendix. As touched upon before, these actors do not necessarily have to be entrepreneurs, but can be any individual that has an attachment to Groningen’s local
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community and acts out of altruistic rather than short-term profit maximizing behavior. This means that these actors can be found not only in the private sector, but also in the voluntary or community sector active in for example nonprofit organizations. To collect the data needed, these actors will be interviewed using semi-structured interviews.
In accordance with the work of Emans (2004), an interview guide is constructed that focuses on attaining the information needed to solve the main research question: “What determines the relative importance of Regional Champions for and within an Entrepreneurial Ecosystem?” In addition, to better tailor the research outcomes to the needs of governmental agencies trying to develop their constituency, the last section of the interview concerns the role of the government currently played in the MVO-Ecosystem and the stability of the Champion’s actions over time under external influences. Section C of the appendix provides a more thorough description of the interview guide construction process by going into detail on the information need underlying the interview, the sub- questions of this research, the variables that were constructed, and the interview questions that were derived from it.
3.2 Data Processing
The interviews will be transcribed, abstracted into concepts, and explored for regularities across cases. Data will be codified by hand and both deductive and inductive codes will be used in this process. Deductive codes are preconstructed labels based on the previously explored literature that group comparable assertions made by interviewees. Examples of such deductive codes concern the barriers Champions have to overcome and their relationship with other actors in the field (Klerkx and Aarts, 2013). Inductive quotes on the other hand are labels that were unexpected and came up during the interview process.
Special attention will be paid to patterns of variables (being the regularities in coded categories), patterns of events (the regularities in processes over time), and the mechanisms that would explain
Interviewee Operative in Activities performed
Gaaike Euwema Educational System Program manager Noorderpoort Duurzaam and business advisor
Noor van Leeuwen Non-governmental MVO organization
Coordinator MVO- Allieantie Noord Nederland Ambter ten Brummelhuis Student-initiative Chairman Enactus and projectleader
Eric Wams Manucipality Project leader Social Return
Jan willem Wennekes Private sector Head of MVO-aimed consultancy firm and director of Social Impact day Noord Jaap de Vries Private sector Founder of the Koploper project
Roelof de Vries Private sector Actively tries to create an Ecosystem for Social Innovation and owner of Met Andere Waarden
Table 1: Interviewees and their role within the MVO Ecosystem
21 the importance of actors for and within the ecosystem. The findings discovered by doing so will be summarized and send back for approval to the interviewee to assure objectivity in data processing.
Findings will furthermore be compared with the existing literature (drawing partially on the Innovation Ecosystem field) to build external validity, and used to formulate propositions to further the field of Entrepreneurial Ecosystem theory. For controllability, the steps taken in these and other processes are recorded in a research diary.
4. Data Analysis and Findings
The following chapter aims to give insight into the data that was gathered during the interviews. The first section provides a more general overview of Championship behavior within an ecosystem, followed by the significance of networking and cooperation as professed by the interviewees. The second part of the analysis will focus specifically on the information regarding Champion importance.
4.1 Champion behavior within an Ecosystem
During the interviews, the interviewees were asked to describe themselves in terms of the help they provide to starting ventures and their contribution to the entrepreneurial ecosystem in general.
Table 2 provides the specifics of the individual interviewees, showing that their contribution takes on a wide variety of forms. Some provide benefits in a very direct way, such as Jan Willem Wennekes who has made a business out of both guiding MVO-minded individuals in starting their venture as well as helping existing ventures with becoming more MVO-minded. But some also provide benefits in a more indirect way. Noor van Leeuwen for example describes her own contributions as ‘coaching the coaches’, as she strives to bundle and provide the most current knowledge and tools available to the individuals operative within MVO-Groningen, as well as creating a sense of direction needed to further develop the MVO-Ecosystem as a whole.
This diversity in roles was found to be a strengthening factor for the Ecosystem. As Euwema put it
“for an ecosystem to function properly you need a great diversity in abilities. An ecosystem that exists out of individuals all sharing one and the same expertise is worthless”. This goes to show that, within an entrepreneurial ecosystem, the diversity of skills and experiences allows for an enhanced ability to overcome the barriers inhibiting venture constitution, or otherwise contribute to the development of the ecosystem. The specific role the network plays in this regard is that quite regularly individuals within the ecosystem refer to others when they themself don’t have the expertise required to advise or benefit those coming to them for help; something which was corroborated in all seven interviews.
