Challenges of building entrepreneurial ecosystems in peripheral places
| Pages | 408-430 |
| Published date | 02 September 2019 |
| DOI | https://doi.org/10.1108/JEPP-03-2019-0023 |
| Date | 02 September 2019 |
| Author | Zimu Xu,Stephen Dobson |
| Subject Matter | Strategy |
Challenges of building
entrepreneurial ecosystems in
peripheral places
Zimu Xu
International Centre for Transformational Entrepreneurship,
Coventry University, Coventry, UK, and
Stephen Dobson
School of Performance and Cultural Industries,
University of Leeds, Leeds, UK
Abstract
Purpose –The purpose of this paper is to investigate challenges of building entrepreneurial ecosystems in
peripheral places. The entrepreneurial ecosystem concept is developing a rising popularity among both
academics and policymakers in recent years where much of the attention has been put in major urban cities.
However, on the way to achieve balanced growth and equity, peripheral places should not be neglected. Thus,
this paper links literature on ecosystem with peripheral region studies in creating a conceptual framework of
developing entrepreneurial ecosystems in peripheral places.
Design/methodology/approach –The paper first reviews literature on entrepreneurial ecosystems and
challenges that peripheral places facing in particular. Then, taking into consideration of literature from both
fields, a conceptual framework is developed. In order to better illustrate the framework, a case study on
Guildford’s digital gaming industry is reviewed based on secondary data.
Findings –Though facing various challenges such as smallness, remoteness and lack of resources,
peripheral places can take advantage of the digital technology and build an entrepreneurial ecosystem of its
own kind through holistic collaborative approach to tackle issues around finance, talents, socio-culture
environment, infrastructure, markets and policy.
Originality/value –The paper is among the first to focus on developing a holistic conceptual framework in
building entrepreneurial ecosystems in peripheral areas. It can lead to a range of further research topics and
contribute to develop viable practices particularly for policymakers.
Keywords Entrepreneurial ecosystem, Rural entrepreneurship, Rural area, Entrepreneurship policy,
Games industry, Peripheral places
Paper type Conceptual paper
Introduction
It is widely acknowledged that entrepreneurship brings value to local and national
economies as well as generating social and community-level impact: “It drives innovation,
creates jobs, develops human potential and satisfies new customer demands”(Jaén et al.,
2013, p. 16). As such, entrepreneurship is accepted globally as an important element of
national development strategies (Pretorius et al., 2005; Bosma et al., 2008; Gibb and
Hannon, 2006). It not only contributes to wealth and job creation, but also potentially
connects the region to a worldwide economy. The level of entrepreneurial activity in some
studies is found to be positively correlated with GDP growth (Acs et al., 2014), with
high-growth small- and medium-sized enterprises (SMEs) seen to positively contribute to
the majority of job creation worldwide (Yeung, 2015). Entrepreneurship is considered an
essential part of this and has become an increasing focus for industries, government and
academics resulting in the establishment of numerous support programmes; although the
full effectiveness of many of these initiatives is questioned (Henry et al., 2017; Dobson
et al., 2018). In studying how to best support entrepreneurship and maximise the chances
of high-growth SMEs, the entrepreneurial ecosystem concept has emerged as an
important factor (Mason and Brown, 2014).
Journal of Entrepreneurship and
Public Policy
Vol. 8 No. 3, 2019
pp. 408-430
© Emerald PublishingLimited
2045-2101
DOI 10.1108/JEPP-03-2019-0023
Received 22 March 2019
Accepted 25 April 2019
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/2045-2101.htm
408
JEPP
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However, if we explore the role of entrepreneurship in rural or developing country
contexts a somewhat different picture emerges. For example, Total Early stage
Entrepreneurial Activity levels in Sub-Saharan Africa are extremely high (c40 per cent)
(GEM Data) compared to the UK or USA, yet GDP contribution in these developing
economies does not match this level of activity (Valliere and Peterson, 2009; Van Stel et al.,
2005). Here, we may consider “subsistence”or “necessity”entrepreneurship (Acs, 2006) as a
symptom of market failure and a result of high unemployment levels. Research into the
optimum ecosystems necessary for a thriving environment of opportunity-driven
entrepreneurship points toward high levels of institutional and infrastructural support
(Isenberg, 2010; Mason and Brown, 2014). Therefore, the more notable entrepreneurial
ecosystems are understandably reported in major urban centres such as New York City,
Boston, London, Shanghai, Berlin and Paris. While many rural policymakers have
attempted to drive economic growth through entrepreneurship with limited success, little
attention has been placed on rural or peripheral areas in building an entrepreneurial
ecosystem. In this paper, “peripheral places”are defined as rural or marginal regions (e.g.
smaller/dispersed urban areas, towns, areas of low density population) rather than major
cities or centres for development.
In comparison with major urban centres, peripheral places often exhibit scarcity in
resources, fewer key institutions, lack of infrastructural connectivity (transport and/or
informational), low skilled labour or lack of labour diversity (Henderson, 2002; OECD, 2016).
It is this absence of many critical ecosystem characteristic which subsequently poses often
insurmountable challenges for local entrepreneurship development (North and Smallbone,
2006; OECD, 2016). Moreover, Aryal et al. (2018) find that urban businesses are better at
capitalising their resources in comparison with peripheral areas. High-growth SMEs are
particularly rare due to the limited existing resources and the impaired ability of
entrepreneurs to acquire then externally. These barriers are formed due to the lack of
business centrality in network of connections. Partnerships between public and private
sectors have a crucial role in bringing resources from both sectors to better serve the society
(Zhang and Chen, 2013). Private sector resource investment is invariably profit driven, and
therefore investment in this area is rare unless with clear returns for the investing firm
(Economic Insight, 2015). However, public sector investment is often driven by the need to
increase national competitiveness and reduce regional inequalities (Duffy-Deno and Eberts,
1989; Tao et al., 2010). Public policy support may seek to influence these objectives through
a variety of forms, such as funding, training and education programmes, incubation or
acceleration programmes, taxation or other business support policies. Thus, this paper
conceptualises how public policy can support the development of entrepreneurial
ecosystems in marginalised, peripheral places to ultimately support the reduction of
regional inequalities.
Entrepreneurial ecosystems
In aiming to understand the role of externalities upon entrepreneurial activity, research
has shifted emphasis from more traditional behavioural or characteristics-based
approaches (Gartner, 1989) due to the perceived lack of consideration for environmental
context. Many studies therefore seek to consider the importance of the wider environment
within which entrepreneurs are situated in (Dodd and Anderson, 2007; Spigel and
Harrison, 2018). Earlier research either contributed or established initial frameworks
on how entrepreneurs and their ventures can be impacted by socio-cultural, economic and
political factors (Dubini, 1989; Spilling, 1996; Malecki, 1997; Neck et al., 2004; Spigel and
Harrison, 2018). Isenberg’s (2010) seminal work “The big idea: how to start an
entrepreneurial revolution”in the Harvard Business Review wasoneofthemost
influential publications that drives the rising popularity of the ecosystem concept.
409
Challenges of
building
entrepreneurial
ecosystems
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