Paris and the Sustainable Ecosystem

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Ideas for Discussion

By Christina Theodoraki (TBS)

 

Sustainable entrepreneurial ecosystem is one of the latest trends for researchers and practitioners (see TBSearch, 2019). Every institution and every city wish to become a successful entrepreneurial ecosystem. A fantastic place where second chances are welcomed, where innovation is a personal and collective goal, where the entrepreneurial spirit is cultivating in educational institutions, where risk taking and proactiveness are key characteristics. But how can it be possible?

 

Entrepreneurial ecosystems are sets of interdependent species connected through various interactions within a specific geographic area to foster entrepreneurship and new business creation.

 

What about successful ecosystems?

Silicon Valley, Tel Aviv, Boston’s Route 128, North Carolina’s Research Triangle, Waterloo, Boulder, Sophia Antipolis are some of the famous entrepreneurial ecosystems that succeeded to create this entrepreneurial mindset. Most research discussions focus on these successful ecosystems by describing their configuration to inspire other cities to do the same. Other discussions take for granted that these successful ecosystems just happened, without investigating the nature and birth of these ecosystems. Furthermore, these latest debates fail to explain why these ecosystems succeeded better than others and how successful entrepreneurial ecosystems could be created in other places while considering local specificities.

 

Previous research tried to predict the magic recipe by listing all elements of a successful ecosystem, replicating and locating them on a different place, hoping that they will interact and create a successful ecosystem. The result of these studies is ZERO! The recipe didn’t work because the local specificities are unique in each place and just putting isolated elements in a place does not guarantee that they will interact.

It’s time to dig beyond the simplistic description of successful ecosystems and find out why some of them fail while others succeed. Entrepreneurial ecosystem success and sustainability are related to the governance and the strategies they develop.

 

Top-down VS bottom-up governance

Institutional defenders consider that policy makers should have an active role in the entrepreneurial ecosystem by creating laws favorable to the entrepreneurial activity and funding high potential start-ups to help them grow. The cyclic model works as follows: the policy makers create favorable laws and fund start-ups – the latter grows, creates employment and pays taxes to the government – the society evolves, as economic development is growing, more public money can be invested on new start-ups.

 

Therefore, policy makers maintain a strong impact in the governance of entrepreneurial ecosystems. Should they continue to do that? Brad Feld (2012) will probably answer “No”. According to his book “Startup communities: Building an entrepreneurial ecosystem in your city”, policy makers should stop influencing the entrepreneurial ecosystem life cycle and promote bottom-up initiatives.

 

In contrast of these pure extremities, the solution is somewhere in the middle. A balanced governance is required for the well-functioning of the entrepreneurial ecosystem. This governance is strongly related to the elements’ interactions. Which individual behavior is more suitable for the well-being of the overall community?

 

To that end, governments favor synergies and cooperative behaviors to create a supportive entrepreneurial culture and collaborative atmosphere within the ecosystem. Is cooperation the most suitable strategy in the ecosystem?

  • Governments have a key role in the entrepreneurial ecosystem in establishing complementarity between ecosystem members and creating a shared entrepreneurial culture within the ecosystem.
  • A combination of top-down and bottom-up initiatives is necessary for the functioning of the entrepreneurial ecosystem.

 

Cooperation VS Coopetition strategies

Is cooperation strategy profitable for the success of the ecosystem? The answer is “Yes”, of course. But what about coopetition. Is it better?

 

Coopetition is the simultaneous combination of cooperation and competition strategies. In the entrepreneurial ecosystem, some species collaborate while others compete. Some discussions raise concerns about pure cooperation and pure competition. Under some
circumstances, pure cooperation can be critical for the ecosystem when opportunistic behaviors of some members occur and profit of private benefits rather than collective ones. In these circumstances, cooperation with eyes closed will cause significant damage in the ecosystem functioning. In contrast, pure competition may decrease the climate of sharing and co-creating more value as a collective community rather that the value created on its one. In both cases, hybrid strategies, such as coopetition are more suitable for the well-functioning of the entrepreneurial ecosystem. Brandenburger and Nalebuff (1995, Harvard Business Review) introduce the “cake metaphor” where members cooperate to make collectively the biggest cake and then they compete to individually take the largest part of it. This metaphor clearly shows the intensity of coopetition behaviors. To manage them, it is important to accept their existence and understand their functioning.

 

The letter n°14 of the Labex Entrepreneurship reveals that coopetition strategy exists in the entrepreneurial ecosystem and this hybrid strategy is more suitable, rather than pure cooperation or pure competition. In short, cooperating with other ecosystem members is the key solution of the well-functioning of the ecosystem, as it creates a safe and trustful atmosphere between members. However, to guarantee ecosystem’s sustainability it is important to also favor competitive behaviors as a challenging engine for the ecosystem’s improvement.

 

While governments overprotect the ecosystem by promoting pure cooperation, the ecosystem metaphor is built on the predators and prey’s interdependencies, which establish the need of coopetition (see Moore 1993, Harvard Business Review). They should hence encourage coopetition behaviors as enablers of the ecosystem sustainability.

  • Policy makers should favor hybrid strategies, such as coopetition, to maintain the sustainability of the ecosystem.
  • Cooperation strategies contribute to the wellbeing of the ecosystem and to build a trustful community.
  • Coopetition strategies are more suitable in the ecosystem rather than pure cooperation or pure competition.

 

Ecosystem evolution

Summarizing, the entrepreneurial ecosystem is not a static image but a living community of species and strategic interactions. Thus, coopetition relationships change as the ecosystem evolve. In the first stages of the entrepreneurial ecosystem creative and more cooperative relationships may dominate. During this period, members need to collaborate to develop a trustful climate and a solid foundation of the entrepreneurial ecosystem. With the maturity of the ecosystem, more opportunistic behaviors of members may emerge in the quest of leadership or value capture. These opportunistic behaviors, if appearing too early, may destroy the entrepreneurial ecosystem. If not, they will enhance the sustainability and adaptability of the ecosystem and allow it to endure in time.

  • Strategic behaviors are related to the ecosystem phase. These behaviors are evolving based on the ecosystem stages. 

 

In short, coopetition strategies are more suitable in the entrepreneurial ecosystem as they allow to pull up all members and improve their practices. Thus, coopetition is necessary for the evolution of the entrepreneurial ecosystem and its sustainability.

 

Further reading

Brandenburger, A. M., Nalebuff, B. J. (1995) The Right Game: Use Game Theory to Shape Strategy, Harvard Business Review, 73(4), 57-71.

Colin, N. (2015) What makes an entrepreneurial ecosystem? The Family, https://salon.thefamily.co/what-makes-an-entrepreneurial-ecosystem-815f4e049804

Feld, B. (2012) Startup communities: Building an entrepreneurial ecosystem in your city. John Wiley & Sons.

Moore, J. F. (1993). Predators and prey: a new ecology of competition. Harvard Business Review, 71(3), 75-86.

Theodoraki, C., (2019) The development of sustainable entrepreneurial ecosystems through social capital: The cases of academic incubators, TBSearch, http://www.tbsearch.fr/en/the-development-of-sustainable-entrepreneurial-ecosystems-through-social-capital-the-cases-of-academic-incubators/

Theodoraki, C., Messeghem, K., Beylier, R.-P., Jésel, S. (2016) Exploration of the French Entrepreneurial Support Ecosystem, Labex Entreprendre Publications, 14, 4, http://labex-entreprendre.edu.umontpellier.fr/files/2013/06/LABEXLETTRE-14-ANGLAIS-HD-page.pdf

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Dean, GWU School of Business

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Anuj Mehrotra, Ph.D., is the dean of the George Washington University School of Business (GWSB). Under Dean Mehrotra’s leadership, GWSB has reimagined graduate business education through its modular and flexible offerings, which feature industry-driven certificates that can be used to create customizable master’s degrees. This innovative design allows the school to proactively respond to the shifting demands of business education. The school has also made changes to its undergraduate offerings by launching new bachelor of science degrees in business analytics and information systems as well as creating a business major for non-business school students. GWSB has also invested in making its programs more accessible through online education. Dean Mehrotra is credited with engaging the alumni and the business communities through innovative programs that focus on student success and lifelong learning. In 2019, alumni giving increased 20 percent and GWSB significantly improved in both national and global rankings while realizing substantial growth in graduate student enrollment.

 

Prior to coming to GWSB in July 2018, Dr. Mehrotra was at the (now) Miami Herbert Business School where he served as senior vice dean, vice dean for faculty development and research, the Leslie O. Barnes Scholar and professor of management science. He also served as the school’s interim dean, vice dean of graduate business programs and executive education, vice dean for faculty affairs, and chairperson of the Department of Management Science. During Dr. Mehrotra’s tenure as interim dean, the school was successfully re-accredited by AACSB, its graduate degree programs grew in enrollment, and the school’s fundraising grew by 70 percent year-over-year. He led the launch of online and hybrid degree programs that helped realize a 70 percent growth in graduate enrollment over a five-year period. Concurrently, the school’s degree and non-degree programs earned recognition among the best in various rankings.

 

Dr. Mehrotra’s research interests are in large-scale optimization and interdisciplinary applications. His research has been published in top-tier academic journals, including Management Science, Mathematical Programming, Naval Research Logistics, and the Informs Journal on Computing. He has been invited to present his research at national and international meetings, and he co-edited a book as well as a special issue of Discrete Applied Mathematics on computational methods for graph coloring and its generalizations. He has also co-chaired several conferences on optimization and related application areas. Dr. Mehrotra has worked with more than two dozen Fortune 500 companies, and his previous experience includes visiting positions at the Tepper School of Business at Carnegie Mellon University and at the T.J. Watson Research Center.

 

Dean Mehrotra received his doctoral degree in operations research from the Georgia Institute of Technology, his master’s degree from Virginia Tech, and his bachelor’s degree in mechanical engineering from the Birla Institute of Technology and Science in India.

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Dr. Ki-Chan Kim is a Professor of Management at the Catholic University of Korea. 

 

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