Entrepreneurial Ecosystem: Definitions and Characteristics: Across the globe, Entrepreneurship can address all the issues related to economic growth, stability, as well as the measurement of well-being in countries. We are moving from the requirements-based Entrepreneurship to the creation of opportunity-based firms which is quite tough; especially in emerging the economies of the marketplace. Entrepreneurial success, as well as impact, directly or indirectly gets affected by the environment or ecosystem in which it is operating its business.

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Entrepreneurial Ecosystem: Definitions and Characteristics

So, the ecosystem plays a very vital role in the growth or decline of the business firm. So, here we are going to discuss the Entrepreneurial Ecosystem and other related info that is required to know. Let us begin.

Definition of Entrepreneurial Ecosystem

According to Mason and Brown (2014), “The Entrepreneurial Ecosystem is a set of different individuals who can be potential or existing Entrepreneurs, organizations that support Entrepreneurship that can be businesses, venture capitalist, business angels, and banks, as well as institutions like universities, public sector agencies, and the entrepreneurial processes that occur inside the ecosystem such as the business birth rate, the number of high potential growth firms, the serial entrepreneurs and their Entrepreneurial ambition.

What do you understand by the Entrepreneurial Ecosystem?

As it is mentioned earlier, the Entrepreneurial Ecosystem is a blend of social, economic, cultural, and political components within a region. Further, an improved Entrepreneurial Ecosystem is created with the help of various elements to support and develop which is helpful to grow the business startups that are being commenced. In addition, newly entered Entrepreneurs are inspired to take the risk as well as begin searching for some funding for their newly developed projects.      

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Within the local environment of entrepreneurs, all these entities are linked with each other and creating their performance formally as well as informally. Thus, the entire system can work together and the interaction between these subsystems must be done in a manner that can accomplish the motive.

Four defining characteristics of the Entrepreneurial Ecosystem: An Intro

As we all know, the Entrepreneurship Ecosystem has a great impact on the growth of the business and makes it easy to get some funding from various institutions. All these super-venture societies are very helpful and assist an enterprise to foster their business and work with some public as well as private sector leaders across a large number of municipalities and nations across the world.

Therefore, let us get back to the basics of the Entrepreneurial Ecosystem and have a look at some of the characteristics that give a better understanding of the whole concept at once. Let us take a look at these below.

  • Comprises of six domains

Hundreds of elements are part of the Entrepreneurial Ecosystem which is segregated into six general domains. It includes culture, allowing policies and leadership, an appropriate amount of finance availability, quality of human capital, markets based on ventures for products, and a wide range of institutional as well as infrastructural assistance.

  • Each Ecosystem is unique

With the help of these six domains, we will get a description of the Entrepreneurial Ecosystem and consists of six mainstream domains but these domains contain several numbers of components that have a high level of complexity and individuality.

To exemplify, in the year the 1970s, the Entrepreneurial Ecosystem of Israel developed without any natural resources, military essentials, and far from the relevant market of their products. Moreover, the ecosystem of Ireland evolved with free education, global multinationals, native English; and the European market’s proximity in the year 1970s.

If talking about the Entrepreneurial Ecosystem of China, then it is developing in the context of various policies based on regions and a totalitarian political system.

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  • Entrepreneurial Ecosystem’s defining root causes has restricted practical value

The level of Entrepreneurship in a society gets affected by the education, well-functioning capital markets, as well as regulatory and legal frameworks. Generally, the impact is very weak and also stays for a long period.

We feel a lot of big changes from time to time in Entrepreneurship that is the result of the term “high order interactions” according to the statisticians. The term “high order interactions” means that a group of variables that are working together.

As a point of fact, a meager number of individuals whether it is two or more can be a catalyst with which there are no changes in the steps involved. While it is helpful to assess and evaluate the Entrepreneurship Ecosystem at the regional level to define a casual path at definite points within time and analyzing that it is of less usage to get into the generic casual paths.

Moreover, it is also possible that sometimes the outcome also acts as causes and we can call it “the law of small numbers”. The law defines that you can somehow make out one or two and more than a random number of successes that help develop the ecosystem casually.

  • Entrepreneurial Ecosystem are comparatively self-sustaining

As we all know “Success breeds Success” by nourishing back the Entrepreneurial Ecosystem’s six domains and there is a highlighting point that it decreases the involvement of government can be and ought to be importantly reduced; not eradicated but reduced to a great extent.

When the six domains of the Entrepreneurial Ecosystem are strong enough, then they are mutually strengthened, as well as public leaders are not interested to invest in the business to help them in surviving battle.

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The programs related to Entrepreneurship must be developed to be self-amortizing to emphasize raising sustainability into the environment.

Key Domains of the Entrepreneurial Ecosystem

On this planet, everything is a part of an ecosystem such as the watershed, the insects, the trees, the grass, and also, the business that is running or on the road of growth. With the growth of your business, the term “Entrepreneurial Ecosystem” suits best with it and it has six major domains.

A lot of models for the Ecosystem are there but we only consider these six as a foundation and here, we are going to get a better understanding of these domains. The six domains include policy, culture, supports, human capital, finance, and markets. All these domains indicate that there is a change from traditional economic thinking to an innovative and new economic people’s view, networks, as well as institutions.

Interaction between these domains of the ecosystem is also a kind of Entrepreneurial activity. This outcome is regarded as the process in which the individual transforms the opportunities into creativity and innovation. Bit by bit, a new value to the society is provided through the development of new products and services.

So, let us begin with the six major domains of the Entrepreneurial Ecosystem that need to be kept in mind while operating any type of business.

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  • Policy Domain

Across the various areas of the world, the pillars of government regulations are diverse and every policy of the government can perk up or scale down the capabilities to start and the expansion of the business. Under this domain, it has various elements such as the easy step to commence a business, incentive on taxes, and laws that could be friendly with the business.

As similar to that, this domain also includes the physical structure, where there is access to the infrastructure, transport as well as telecommunication that also affect the businesses according to the World Economic Forum.

  • Finance Domain

For all types of businesses, it is very effective and advantageous to have financial reserves as they can maintain growth by obtaining more resources. A key aspect of any business is the financial resources as it provides support to appoint people and to purchase as well as lease properties as well as tools and make investments in marketing and sales, and keep track of customers.

The financial alternatives that are available with the startup of businesses also began with kin and kith, investors, venture capital, private equity, and also debt access. There is a positive relationship between the flow of finance and business growth according to the World Economic Forum.

  • Culture Domain

It has been argued that staring cultural support is required for an enterprise to establish an emerging Entrepreneurial ecosystem.

The tolerance of risk and failure within an enterprise, priority given to self-employment, innovation celebration, success stories, research cultures, and role models are the aspects that are always of huge importance in cultural support as explained by the World Economic Forum. All these create a cultural domain.

  • Support Domain

A variety of idiosyncratic, institutions, as well as organizations, assists the business to create and expand as well.

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Some actors that included are mentors, consultants, professionals such as accounting, incubators, accelerators, human resources, and so on. (Explained by World Economic Forum)

  • Human Capital Domain

The quality and the quantity of the workforce are the human capital domain. Based on the skills and abilities that people have, the working environment is created accordingly. There are some elements of this domain such as technical and management talent, the experience of an entrepreneurial company, immigrant workforce access, and the availability of outsourcing.

A combination of such components affects the growth of the business. Within the domain of human capital, education and training are considered.

  • Market Domain

The representation of the consumer’s willingness to buy products as well as services of a company is indicated by the market domain.

Further, the potential of the consumers is considered as a key aspect and there are some other components of the market domain like the national and international market, small, large, and medium-sized businesses that are vital to reach the business and grow across a region.


All in all, it is required to know whether an Entrepreneurial ecosystem is nature or nurture. It means that such an ecosystem is a result of some natural developments or can it be designed intelligently? The entire article gives us a hint that it is the result of intelligent evolution as it is the procedure to join the hands of markets and public leadership.         

All the aspects included in the article reflect that six domains are significant to ensure the enabling of an Entrepreneurial Ecosystem.

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