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How underdeveloped economies can foster their entrepreneurial ecosystems

Asper Assistant Professor Yifan Wei published in Research Policy

April 27, 2022 — 

What role do regional governments play in the creation of new businesses? Many have investigated this question, but their answers are largely applicable only to developed economies. Focusing in on developing economies, this research takes a more holistic approach to empirical studies finding that when entrepreneurial ecosystem (EE) lens is applied to emerging economies, regional governments play a supportive role in fostering self-sustaining entrepreneurship activities.

These findings by Dr. Yifan Wei, Assistant Professor at the Asper School of Business, were recently published in Research Policy, a peer-reviewed academic journal established in 1971 and published on behalf of the Science Policy Research Unit. Research Policy is widely regarded as the leading journal in the field of innovation studies and included in the Financial Times’ Top 50 business and management journals.

In his sole-authored work titled Regional governments and opportunity entrepreneurship in underdeveloped institutional environments: An entrepreneurial ecosystem perspective, Wei indicates that in developing economies, regional governments support the EE because they are often the only source of assistance necessary for entrepreneurs to create and maintain their business. This means they need help from other aspects such as a market-based economy, higher education, entrepreneurial cultures, and social entrepreneurship. The article specifically examines the interplay between these components within China’s economic context from 1993 – 2013.

The article also finds that because China has underdeveloped institutional environments in some areas after their transition from a socialist economy to a market economy, there are disparities in levels of economic and entrepreneurial growth that make it an ideal place and time to study the supportive role governments play in the EE.

The study proves that when all aspects of the entrepreneurial ecosystem are working properly, self-sustaining entrepreneurship activities are fostered and businesses in those areas thrive.

“While attempting to mimic the success of Silicon Valley, many emerging economies face challenges or fail,” said Wei. “My research speaks to policymakers and business communities in emerging economies by offering an ecological view of entrepreneurial activities, which highlights the joint forces of various key elements in a society, including governments, markets, higher education, culture, and the social sector, in cultivating hi-growth entrepreneurship. I hope it may inspire more holistic thinking and policies to achieve the synergy for future entrepreneurship.”

Wei’s study also has real-world implications for developing countries that hope to measure their regional EEs and grow further. These economies can see success if they are able to better support their regional governments in prioritizing the EE through policies.

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