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The Dutch Entrepreneurial Ecosystem

41 Pages Posted: 30 Jul 2014 Last revised: 12 Aug 2014

Erik Stam

Utrecht University - Utrecht University School of Economics; Utrecht University - Tjalling C. Koopmans Research Institute

Date Written: July 29, 2014

Abstract

In this report we discuss, synthesize and further develop the entrepreneurial ecosystem approach. A dynamic entrepreneurial ecosystem approach is developed to analyze entrepreneurship in the Netherlands: how it has evolved, why the rate of solo self-employment has increased and how the entrepreneurial ecosystem can be adapted to increase productive entrepreneurship.

We summarize and extend the entrepreneurial ecosystem literature with a model that includes framework conditions (formal institutions, culture, physical infrastructure, and demand) and systemic conditions (networks, leadership, finance, talent, new knowledge, and support services) that affect entrepreneurial outputs (entrepreneurial activity) and outcomes indicating value creation (productivity, income, employment and well-being).

The Netherlands has seen a remarkable rise of independent entrepreneurship in the last decade. However, this rise of independent entrepreneurship reveals to be predominantly a rise in solo self-employment, not an increase in growth oriented and innovative entrepreneurship. This shift can partly be explained by the specific institutional context of the Netherlands. The rise of self-employment in the Netherlands seems to have lowered unemployment rates, but it is unlikely that the rise of self-employment and new firm formation has positively affected innovation and in the end productivity growth over the period 1987-2013. This rise of self-employment and new firm formation and stagnation of innovation is what we label the Dutch Entrepreneurship Paradox. Especially favorable fiscal treatment of self-employed, and an increasing demand for flexible labor, stimulated the growth in the number of solo self-employed since the early 2000s. There is a major policy task not to let entrepreneurship be a driver of productivity decline (or at best a flexible belt in the labor market), but to stimulate productive entrepreneurship instead.

In order to increase productive entrepreneurship in the Netherlands, we propose four policy actions. Each action addresses a change in one of the four framework conditions of the entrepreneurial ecosystem: changing formal institutions to enable labor mobility (development and circulation of talent); opening up public demand for entrepreneurs, to provide finance for new knowledge creation and application; stimulating a culture of entrepreneurship and entrepreneurial leadership; adapting or creating physical infrastructure to enhance knowledge circulation and networks.

Keywords: entrepreneurship, entrepreneurial ecosystem, economic development, new value creation, institutions, public policy

JEL Classification: M13, O10, O31, O32, O38, O52, L53, R58, B52

Suggested Citation

Stam, Erik, The Dutch Entrepreneurial Ecosystem (July 29, 2014). Available at SSRN: https://ssrn.com/abstract=2473475 or http://dx.doi.org/10.2139/ssrn.2473475

Erik Stam (Contact Author)

Utrecht University - Utrecht University School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, +31 30 253 7373 3584 EC
Netherlands

Utrecht University - Tjalling C. Koopmans Research Institute ( email )

Adam Smith Building
Kriekenpitplein 21-22
Utrecht, 3584 EC
Netherlands

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