Diagnosing enablers and bottlenecks in individual entrepreneurial ecosystems with benchmarking data is crucial to help policymakers, ecosystem builders, and other ecosystem stakeholders identify and prioritize areas to improve. In this session, the OECD will launch a major new report on Entrepreneurial Ecosystem Diagnostics presenting cross-country benchmarking and country profiles of national entrepreneurial ecosystem performance. This diagnostic tool complements other international tools and reports, each with its own particular focus and approach, including the APEXE Nations Report from GEN and Startup Genome and the African Entrepreneurial Ecosystems Index. Participants will debate the indicators and findings and how to make use of measurement tools for ecosystem development.
Join us for an interactive workshop that will:
Measuring Entrepreneurial Ecosystem Performance: Tools, Frameworks, and Future Directions
Brief Summary
This session brought together experts from the OECD, Startup Genome, Faith Foundation, and the Alan Grace Center for African Entrepreneurship to discuss the critical question of how to measure the performance of entrepreneurial ecosystems. Recognizing that different tools and approaches exist and that measuring ecosystems is a complex, evolving field, the speakers presented their respective methodologies and insights. The discussion highlighted the importance of data-driven diagnosis to identify bottlenecks, prioritize policy reforms, and track progress, while also addressing the limitations and potential biases of various measurement tools. The session underscored the need for ongoing development and collective learning in this vital area for supporting entrepreneurship.
Outline
• Introduction: Setting the stage for discussing different approaches and tools for measuring entrepreneurial ecosystem performance. Introduction of speakers from OECD, Startup Genome, Faith Foundation, and Alan Grace Center.
• OECD Entrepreneurial Ecosystem Diagnostics Report: Presentation of a new OECD report and diagnostic tool.
◦ Framework adapted from Eric Stam.
◦ Components: Inputs (10 elements like institutions, culture, networks, resources), Outputs (performance metrics like startup/survival rates), and Variation (performance differences by social group/region).
◦ Focus on productive entrepreneurship (employment generating employer enterprises).
◦ Data covers 38 OECD countries at the national level.
◦ Avoids a single composite indicator for ranking; aims to help countries diagnose strengths and weaknesses.
◦ Includes country profiles and inspiring policy practices.
◦ Methodology relies on available international data, aggregated using geometric mean, with indicator selection based on research, correlation/principal component analyses, and expert input.
◦ Tool enables seeing change over time and identifying areas for policy intervention.
◦ Discussed Variation component addressing performance differences by region and social group (e.g., "missing entrepreneurs" rate by gender).
• Startup Genome's Measurement Approaches: Chris Haley presented Startup Genome's tools.
◦ GSCR Index: A composite index run for over a decade, similar to the OECD approach with ~40 metrics combined into sub-factors. Aggregates to the national level to assess which ecosystem maximizes chances for high-tech, high-growth, VC-backed entrepreneurship. Rigorously tested against output measures like success rates, VC funding, unicorns.
◦ Apex Index: An experimental pilot with the G20 measuring the degree to which ecosystems utilize their innovative potential by comparing innovative potential vs. entrepreneurial activity composites.
◦ Use Cases: Diagnose gaps, prioritize focus areas (e.g., capital vs. talent), design interventions by comparing with peer ecosystems, and build buy-in among policymakers.
◦ Caveats: Composites reduce complexity but obscure information; transparency is needed; metrics for important factors like mindset and connectivity are still needed.
• Critique and Discussion: Dan, one of the founders of the entrepreneurial ecosystem metaphor, offered a critique.
◦ Analogy: An ecosystem (like a swamp) involves interconnected parts creating a stable, self-regulating system.
◦ Critique: Current tools (including those presented) extract one actor (the policymaker) and focus on their needs, rather than supporting the needs of all actors (bankers, media, universities, entrepreneurs). This is described as an "anti-ecosystem approach".
◦ Critique extended to focusing only on high-growth, venture-backed firms, which represent a tiny fraction of global entrepreneurship and are only valuable to a small group.
◦ Response (John): The OECD tool can be seen as a "policy maker ecosystem tool" designed for that specific player. The OECD tool does not focus solely on VC-backed firms.
◦ Response (Chris): The tool is primarily for policymakers but helps identify areas (like talent or funding) where interventions would involve working with other actors (universities, banks, VCs).
• Africa-Focused Measurement: Pumlani Kwana discussed efforts at the Alan Grace Center.
◦ Context: The entrepreneurial ecosystem concept is prominent in practice but scarce in African research, partly due to lack of data.
◦ Framework: Adapted Eric Stam's framework into a seven-factor model (excluding 'leadership' and other factors less relevant or measurable in the African context) using 20 indicators.
◦ Africa Entrepreneurial Ecosystem Index: Launched as a working paper covering 29 countries. The index correlates well with productive ecosystem measures (new corporations, innovative startups, high growth firms) and outperforms GDP per capita.
◦ Presentation: Uses a simple "heat map" (red=bad, yellow=okay, green=good) for policymakers.
◦ Insights: The heat map reveals "pathologies" across Africa; even the best countries score only slightly above average, indicating widespread challenges. This raises questions about exploring trans-national policy approaches given the state of individual countries' ecosystems.
• Subnational and Micro-Level Measurement in Nigeria: Aden Adme shared Faith Foundation's work.
◦ Motivation: National indicators can mask significant disparities at subnational (state) levels.
◦ Approach: Provides ecosystem snapshots relevant at both country and subnational levels, focusing on micro, small, and medium businesses (~90%+ of Nigerian entrepreneurial activity).
◦ Framework: Uses a top-line level of five indicator areas with ~20 sub-indicators.
◦ Disaggregation: Emphasizes disaggregating data by gender, age, and location to make it useful for policymakers, implementers, and program designers. Shared an example of a youth entrepreneurship ecosystem mapping study.
• Concluding Remarks & Discussion: Eric Stalman emphasized the OECD tool as a public good produced through collective learning involving many stakeholders.
◦ Purpose: A diagnostic tool to help policymakers understand their system, move beyond following fads, and engage in better-informed dialogue with stakeholders. It helps identify issues like corruption or culture that entrepreneurs might not name directly.
◦ Use Cases: Collective learning within and between countries, identifying areas for improvement, and informing monitoring/evaluation of policies. Illustrated with an example for Chile.
• Q&A and Future Directions:
◦ Question: How can rankings/indexes address inequality?
◦ Response: The OECD report includes a "variation" component, looking at regional and social group differences, including the "missing entrepreneurs" rate as one way to account for inequality of access. More detailed work could potentially involve regional versions or sub-indexes for specific groups (e.g., women entrepreneurs), but this increases data demands.
◦ Question: How can the audience help move this work forward (especially for the OECD tool)?
◦ Response: Get the tool used and disseminated; start dialogues and workshops with policy makers; provide feedback on future iterations, including suggestions for better indicators or how to incorporate inequality aspects more deeply.
Notable Quotes
• "How do you know what parts of the ecosystem you need to strengthen? And data would help."
• "This is an anti-ecosystem approach to ecosystems. It's extracting the mosquito, the policy maker out and saying, 'We're going to address...'"
• "It's not about measuring that this country is number one or number two... But we think this image is quite powerful because... it actually shows you pathologies."
Key Takeaways
• Measuring entrepreneurial ecosystems is crucial for policy but complex and evolving: There are different valid approaches depending on the focus (national vs. subnational, high-growth vs. all businesses) and available data.
• Diagnostic tools are valuable for identifying strengths and weaknesses: Rather than simple rankings, tools that highlight specific bottlenecks (like access to finance, talent, or regulatory issues) enable targeted policy interventions.
• Context matters for framework design: Measurement frameworks need to be adapted to the specific geography and type of entrepreneurship being studied, as shown by the African and Nigerian examples.
• Data disaggregation is key for understanding inequality and informing targeted support: Breaking down data by region, gender, age, or sector reveals disparities hidden in national aggregates and helps design effective programs.
• Measurement is a starting point for dialogue and learning: Tools like the OECD's are intended to initiate conversations among stakeholders and facilitate collective learning, not provide final answers.
Resources Mentioned
• OECD Entrepreneurial Ecosystem Diagnostics Report: Available on the OECD website.
• OECD Working Paper on Data and Methods: Companion paper to the diagnostics report, available online.
• OECD Entrepreneurship at a Glance: Past publication series (stopped in 2017) that provided country entrepreneurship rates.
• OECD The Missing Entrepreneurs: Report series on social group differences in entrepreneurship (latest edition 2023 mentioned).
• Startup Genome GSCR Index Methodology: Available online.
• Startup Genome Apex Index: Launched as a pilot with the G20.
• Alan Grace Center Africa Entrepreneurial Ecosystem Index: Available as a working paper.
• Faith Foundation Research: Available on their website.
Action Items
• Disseminate and utilize the OECD tool: Get the OECD diagnostics report known about and used.
• Initiate dialogues with policymakers: Use the results to start conversations with governments and stakeholders about local ecosystem performance.
• Hold workshops: Organize workshops to discuss the results, potentially with involvement from the OECD.
• Provide feedback: Offer suggestions for improving future editions of the tools, including indicators and how to better address inequality.
