Entrepreneurial Ecosystems

Sophie Boutillier, Denis Carré, Nadine Levratto

• Publisher: Wiley-ISTE
• Year: 2016
• ISBN:
  9781119285182
• Edition: 1
• Topic: Technologie et ingénierie
• Subtopic: Ingénierie de l'électricité et des télécommunications

In today's rapidly changing business landscape, entrepreneurship is growing and actively promoted by policy makers. Several reports explore the influence of entrepreneurship on the economy and put some emphasis on its positive influence GDP per capita, unemployment and exports. However, entrepreneurship does not go per se and it is now broadly admitted that the decision of the entrepreneur is narrowly connected with its environment, the so-called entrepreneurial ecosystem. This book show why policymakers, entrepreneurship supporters, and entrepreneurs themselves should keep in mind the locally structured nature of entrepreneurial networks.

Even if the notion of Entrepreneurial Ecosystem has become quite popular, among the international organization, development agencies and public administrations, this concept is often considered as a new one having its origins in very recent publications. This books aims at showing that entrepreneurial ecosystems have their roots in the history of economic thought and that scholars have long been conscious of their importance. Instead of insisting upon the diversity of agents involved in these organizations, it also put some emphasis on the importance of the linkages and sharing between them and suggests some orientations in view of a performing evaluation system.

1
Reputed Authors in the Field of Territorial Economics

Economic thinking, which has developed gradually over the centuries, places more emphasis on the aim of studying the economic actors than their actual geographical environment. “To begin with, the territory had no independent existence at the heart of economic theory” [ZIM 08, p. 106]. It was as if the concept of territory was implicit and that there was no need to refer to it. Thus, in line with the assertion of liberal thinking (first classic and then neoclassic), the reference to territory disappeared gradually. As a matter of fact, it is present in the mercantilist works, with reference to the borders of the realm, or in those of the physiocrats, with reference to the land’s production capacity. However, it almost disappeared in the classic works on the subject and was totally non-existent in those of the marginalists, who, however, developed economic theory during the 20th Century. Territorial economics is somewhat specific, compared to economic theory as a whole, having, on the one hand, developed when industrial capitalism became the dominant production model in Western Europe and, on the other hand, emerged within those countries which were in decline as compared to the two dominant economic powers from the beginning of the 19th Century, these being Great Britain and France. It was indeed in Germany that the foundational texts on territorial economic analyses were published, particularly with the foundational works on the subject by Von Thünen and Alfred Weber. The only difference to this epistemological representation was Marshall, who, out of necessity, we will discuss in this chapter.

In the context of this section, we will present a short assessment of territorial economics. We will show that the territorial aspect of economic development has not followed a lineal course from ignorance to recognition. In fact, it has been quite the contrary. The re-emergence of the concept of territory at the end of the 20th Century falls within this historic trajectory. Economic thinking upon territory falls within a given economic, social, political, and intellectual context which contributes to structuring this line of questioning. As a consequence, we have differentiated the founding fathers of territorial economics (see section 1.1), encompassing the longest chronological time period (from the Ancient Greeks to the 20th Century) and contemporary theories (see section 1.2) which provides the broad outline of the almost exponential growth of the territorial economy since the end of the 20th Century.

1.1. The founding fathers of territorial economics

1.1.1. The disappearance of the concept of territory

In its etymological sense, economics (derived from the Greek term “oikonomia”) is defined as “household management”, the household referring in the ancient Greek lexicon to a landholding, or an economic entity, which is both geographically defined and situated. In the ancient Greek context, the economist refers to the one who manages this landholding, which includes those who live there (whether they be slaves, their wives, or children). In The Economist (published around 362 BC), Xénophon is full of advice for the maintenance of the land and agricultural work. He placed emphasis upon what has since been termed “innovation” to increase outputs.

There was very little economic analysis during the European Middle Ages, except for some authors such as St. Augustine (in the 4th Century) or St. Thomas Aquinas (in the 13th Century). However, only certain authors around the Mediterranean Basin were distinguished writers upon the subject. Thus, during the second half of the 14th Century, Ihn Khaldoum, who Marx and Engels subsequently identified as the pioneer of materialism, developed a multi-disciplinary social territory theory based upon a dialectic analysis between rural and urban order: economic development starts in the countryside (which is characterized by stability and the inter-dependence of social order). However, this situation evolves with urban growth where the inhabitants are, of necessity, corrupted by comfort and luxury which urban life offers. This evolution, denounced by Ihn Khaldoum, also follows the process of change from an economy based upon production (the countryside) towards an economy based upon trade (at that time the town). The town was identified as a place full of danger, luxury and vice. On the other hand, the countryside is a territorial area for production, based upon social relationships at local level.

The economics of the mercantilist era (between the 16th and the 18th Century) also implicitly defended the idea of territorial anchorage of economic activity as mercantilist thinking was orientated towards the defense of the realm’s interests, and, as a consequence, of the territory, the main objective being to bring maximum wealth into the realm whilst only spending the minimum abroad. It was necessary to protect the realm’s borders by two fundamental means:

1. a) war (expanding the territory and securing access to new resources);
2. b) trading but securing the physical integrity of the territory, by means of a protectionist policy, and promoting economic activity within the realm, by creating manufacturers by appointment to royalty. The mercantilist state structured the territory by its efforts, in particular with assistance from Vauban [CLA 08].

However, territorial analysis by the French and British mercantilists remained rudimentary, confusing political, legal, economic and cultural spaces; “The notions of state, territory, market, and nation were, as a consequence, considered to be equivalents” [GAR 01, p. 25]. This was not the case in Germany where the concept of multi-dimensional space was at the heart of economic theory.

Physiocracy, the free-market movement which developed during the Age of Enlightenment, did not ignore the territory either. For the physiocrats, economic development was based upon two foundations: agriculture and free-market. The reference to territory is also implicit, taking account of the status afforded to agriculture. François Quesnay particularly placed emphasis upon private property and agricultural work. The economic development of the realm involved the development of large rural holdings, applying modern agriculture methods.

This theory was expanded in the thinking of Jean-Baptiste Say, who, known for his free-market ideas at the beginning of the 19th Century, developed an analysis of the economic role of the territory, which in some respects heralded the thinking of Alfred Marshall upon “agglomeration effects” or the “industrial atmosphere”. Say explains how entrepreneurial activity develops much more quickly in a territory which is instantly active on the economic front. An entrepreneur can more easily do good business in Paris or London than in a village far away from these large urban centers. “A merchant established in a rich and populous town sells a much larger amount than one who sets up in a poor district, with a population sunk in indolence and apathy. What could an active manufacturer, or an intelligent merchant, do in a small deserted and semi-barbarous town in a remote corner of Poland or Westphalia?” [SAY 80, p. 58]. Then he adds, “(…) whilst in Paris, Amsterdam or London, in spite of the competition from a hundred dealers on his own line, he might do business on the largest scale possible. The reason is obvious. He is surrounded by people who produce largely in an infinite number of ways, and who make purchases, each with his respective products, that is to say, with the money arising from the sale of what he may have produced” [SAY 80, p. 58]. Wealth generates wealth through a dynamic process. Say particularly emphasizes the role of urban areas where wealth and economic activity are concentrated. Urban centers are both the centers of consumption where “rich people” find what they wish to consume and the centers of production, as businesses locate their head office in urban centers. In addition, the capital, which is essential for setting up a business, is in circulation there. There is also the implied idea according to which a network of close relations is forged, as the capitalist who puts money into a business desires to monitor its use. In Paris, London and Amsterdam, there are shops, where nothing else is sold but the single article of tea, oil or vinegar; and it is natural to suppose that such shops have a much better assortment of the single article, than those dealing in many different commodities, all at once. Thus, in a rich and populous country, the middleman, the wholesaler, and the retail dealer each conduct a separate branch of commercial industry, and conduct it with greater perfection as well as greater economy. Yet they all benefit by this economy; and the fact that they do so, if the explanations already given are not convincing, experience bears irrefragable testimony; for consumers always buy cheapest where commercial industry is the most subdivided. Ceterisparibus, a commodity brought from the same distance is sold cheaper at a large town or fair, than in a village or hamlet” [SAY 80, p. 40].

This particular novelty in Say’s philosophy towards the classics as a whole is undoubtedly linked to his personal experience in the early 19th Century as an entrepreneur in a rural agricultural region. During this time, Say faced a number of complications due to his distance from the main European cities [UZU 15].

The British classical writers in the field on the other hand, are at odds with these works. In their works which appeared when Great Britain was the “workshop” of the world, the global market constituted the territory. The international division of labor flowing from free trade took shape independently of territorial affiliation (in the national sense of the term). National territories were perceived as resource pools (of labor and arable land). This only took account of available and exploitable resources. The British classic writers in the field thus very quickly imposed a model of economic development, intended to be universal, or a kind of turnkey recipe, which in all probability, would be used everywhere all the time. The theories of Adam Smith and David Ricardo upon international trade are particularly symbolic of this aim. Strictly speaking, the territory does not exist, except for the flow of trade between two sovereign nations, which only exist by virtue of their factor endowments (these being labor and arable land). On the other hand, the theory of profitability which Ricardo and Thomas Malthus opposed, and the underlying worry about the availability of obtainable resources, indirectly raises the issue of territory. Indeed, demographic pressure over a given geographical area leads to cultivation of less and less fertile land, which has a negative impact on work productivity.

The concept of territory suggested by Karl Marx is just as embryonic, not to say simplistic. Without shaping a theory around reasons for economic activity location in any geographical area, Marx suggests a relational theory between territory and capitalism. He writes in Das Kapital: “It is not the tropics with their luxuriant vegetation, but the temperate zone, that is the mother-country of capital. It is not the mere fertility of the soil, but the differentiation of the soils, the variety of the natural products, the change of the seasons, which form the capital basis of the social division of labour, and which by changes in the natural surroundings, spur man on the multiplication of his wants, his capabilities, his means and modes of labour” [MAR 67, p. 362]. The structuring role of nation states is also hammered home in the Communist Party Manifesto (1848), closely related to Capital’s dynamics. Karl Marx and Friedrich Engels write to the effect that the bourgeoisie created the global market and that Dialectically, the development of capitalism relies upon negation and affirmation at nat...