Skip to main content
SpringerLink
Log in

Measuring the efficiency of an entrepreneurial ecosystem at municipality level: does institutional transparency play a moderating role?

  • Regular Article
  • Published:
Eurasian Business Review Aims and scope Submit manuscript

Abstract

This study measures the output (start-ups) of an entrepreneurial ecosystem and estimates the moderating effect of institutional transparency on the relationship between entrepreneurial ecosystem and start-ups, applied to the context of Portuguese municipalities. Using factor analysis, a composite index of entrepreneurial ecosystem is constructed. The empirical results reveal that institutional transparency catalyzes the positive effect of entrepreneurial ecosystem index on the start-ups. Nevertheless, when the individual effects of entrepreneurial ecosystem’s elements on start-ups are analyzed, the composite index of institutional transparency reveals to be non-linearly related with the output of the entrepreneurial ecosystem, denoting a negative coefficient, in the linear form, and a positive coefficient, in the quadratic form. In addition, increases in financial and economic transparency and the transparency in urban planning deter the new business formation in a municipality, whereas the municipalities where public procurement is relatively transparent are found to be attracting more start-ups. Results also suggest that by increasing the transparency in public procurement, the government can raise the number of start-ups in a municipality. The empirical findings also corroborate the thesis that the presence of higher education institutions in a municipality help to attract more start-ups.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Source: Nicotra et al. (2018)

Similar content being viewed by others

Notes

  1. For more details, please consult: https://transparencia.pt/.

  2. For more details, please consult: https://www.pordata.pt/

References

  • Acs, Z. J., Autio, E., & Szerb, L. (2014). National systems of entrepreneurship: Measurement issues and policy implications. Research Policy, 43(3), 476–494. https://doi.org/10.1016/j.respol.2013.08.016

    Article  Google Scholar 

  • Acs, Z. J., Estrin, S., Mickiewicz, T., & Szerb, L. (2018). Entrepreneurship, institutional economics, and economic growth: An ecosystem perspective. Small Business Economics, 51(501), 514. https://doi.org/10.1007/s11187-018-0013-9

    Article  Google Scholar 

  • Acs, Z. J., & Mueller, P. (2008). Employment effects of business dynamics: Mice, gazelles and elephants. Small Business Economics, 30, 85–100.

    Google Scholar 

  • Adler, P. S., & Kwon, S. W. (2002). Social capital: Prospects for a new concept. Academy of Management Review, 27, 17–40.

    Google Scholar 

  • Agarwal, R., Echambadi, R., Franco, A. M., & Sarkar, M. (2004). Knowledge transfer through inheritance: Spin-out generation, development, and survival. Academy of Management Journal, 47(4), 501–522.

    Google Scholar 

  • Aidis, R., Estrin, S., & Mickiewicz, T. (2008). Institutions and entrepreneurship development in Russia: A comparative perspective. Journal of Business Venturing, 23, 656–672.

    Google Scholar 

  • Alvedalen, J., & Boschma, R. (2017). A critical review of entrepreneurial ecosystems research: Towards a future research agenda. European Planning Studies, 25(6), 887–903.

    Google Scholar 

  • Andersson, M., & Koster, S. (2011). Sources of persistence in regional start-up rates-evidence from Sweden. Journal of Economic Geography, 11(1), 179–201.

    Google Scholar 

  • Anokhin, S., & Schulze, W. S. (2009). Entrepreneurship, innovation, and corruption. Journal of Business Venturing, 24(5), 465–476.

    Google Scholar 

  • Armington, C., & Acs, Z. J. (2002). The determinants of regional variation in new firm formation. Regional Studies, 36(1), 33–45.

    Google Scholar 

  • Arrighetti, A., Seravalli, G., & Wolleb, G. (2008). Social capital, institutions and collective action between firms. In D. Castiglione, J. Van Deth, & G. Wolleb (Eds.), Handbook of social capital (pp. 220–250). Oxford University Press.

    Google Scholar 

  • Audretsch, D. (1995). Innovation, growth and survival. International Journal of Industrial Organization, 13(4), 441–457.

    Google Scholar 

  • Audretsch, D. B., & Belitski, M. (2017). Entrepreneurial ecosystems in cities: Establishing the framework conditions. The Journal of Technology Transfer, 42, 1030–1051. https://doi.org/10.1007/s10961-016-9473-8

    Article  Google Scholar 

  • Audretsch, D. B., Cunningham, J. A., Kuratko, D. F., Lehmann, E. E., & Menter, M. (2019). Entrepreneurial ecosystems: Economic, technological, and societal impacts. The Journal of Technology Transfer, 44, 313–325. https://doi.org/10.1007/s10961-018-9690-4

    Article  Google Scholar 

  • Audretsch, D. B., & Fritsch, M. (1994). On the measurement of entry rates. Empirica, 21, 105–113.

    Google Scholar 

  • Autio, E., Kenney, M., Mustar, P., Siegel, D., & Wright, M. (2014). Entrepreneurial innovation: The importance of context. Research Policy, 43(7), 1097–1108.

    Google Scholar 

  • Bahrami, H., & Evans, S. (1995). Flexible re-cycling and high-technology entrepreneurship. California Management Review, 37, 62–89.

    Google Scholar 

  • Baptista, R., Escaria, V., & Madruga, P. (2008). Entrepreneurship, regional development and job creation: The case of Portugal. Small Business Economics, 30(1), 49–58.

    Google Scholar 

  • Baptista, R., Karaöz, M., & Mendonça, J. (2014). The impact of human capital on the early success of necessity versus opportunity-based entrepreneurs. Small Business Economics, 42(4), 831–847.

    Google Scholar 

  • Baptista, R., & Mendonça, J. (2010). Proximity to knowledge sources and the location of knowledge-based start-ups. Regional Science, 45(1), 5–29.

    Google Scholar 

  • Baumol, W. J. (1990). Entrepreneurship: productive, unproductive, and destructive. Journal of Political Economy, 98(5), 893–921.

  • Baumol, W. J. (1993). Formal entrepreneurship theory in economics: Existence and bounds. Journal of Business Venturing, 8(3), 197–210.

  • Baumol, W. J., & Strom, R. J. (2007). Entrepreneurship and economic growth. Strategic Entrepreneurship Journal, 1(3–4), 233–237. https://doi.org/10.1002/sej.26

    Article  Google Scholar 

  • Bhawe, N., & Zahra, S. A. (2019). Inducing heterogeneity in local entrepreneurial ecosystems: The role of MNEs. Small Business Economics, 52(2), 437–454.

    Google Scholar 

  • Bologna, J., & Ross, A. (2015). Corruption and entrepreneurship: Evidence from Brazilian municipalities. Public Choice, 165(1–2), 59–77.

    Google Scholar 

  • Boschma, R. A., & Fritsch, M. (2009). Creative class and regional growth: Empirical evidence from seven European countries. Economic Geography, 85(4), 391–423.

    Google Scholar 

  • Bourdieu, P. (1986). The forms of capital. In J. Richardson (Ed.), Handbook of theory and research for the sociology of education (pp. 241–258). Greenwood.

    Google Scholar 

  • Brown, R., & Mason, C. (2017). Looking inside the spiky bits: A critical review and conceptualisation of entrepreneurial ecosystems. Small Business Economics, 49(1), 11–30.

    Google Scholar 

  • Bruns, K., Bosma, N., Sanders, M., & Schramm, M. (2017). Searching for the existence of entrepreneurial ecosystems: A regional cross-section growth regression approach. Small Business Economics, 49(1), 31–54.

    Google Scholar 

  • Brush, C., Edelman, L. F., Manolova, T., & Welter, F. (2018). A gendered look at entrepreneurship ecosystems. Small Business Economics, 53, 1–16.

    Google Scholar 

  • Carbonara, E., Santarelli, E., & Tran, H. T. (2016). De jure determinants of new firm formation: How the pillars of constitutions influence entrepreneurship. Small Business Economics, 47(1), 139–162.

    Google Scholar 

  • Carree, M. A., & Thurik, A. R. (2008). The lag structure of the impact of business ownership on economic performance in OECD countries. Small Business Economics, 30(1), 101–110.

    Google Scholar 

  • Cohen, B. (2006). Sustainable valley entrepreneurial ecosystems. Business Strategy Environment, 15, 1–14.

    Google Scholar 

  • Coppier, R., & Piga, G. (2006). Why do transparent public procurement and corruption go hand in hand? Rivista Di Politica Economica, 96(1/2), 185.

    Google Scholar 

  • Cunningham, J. A., Menter, M., & Wirsching, K. (2019). Entrepreneurial ecosystem governance: A principal investigator-centered governance framework. Small Business Economics, 52(2), 545–562.

    Google Scholar 

  • da Cruz, N. F., Tavares, A. F., Marques, R. C., Jorge, S., & de Sousa, L. (2016). Measuring local government transparency. Public Management Review, 18(6), 866–893.

    Google Scholar 

  • Dejardin, M. (2011). Linking net entry to regional economic growth. Small Business Economics, 36, 443–460.

    Google Scholar 

  • Del Giudice, M., Nicotra, M., Romano, M., & Schillaci, C. E. (2017). Entrepreneurial performance of principal investigators and country culture: Relations and influences. The Journal of Technology Transfer, 42(2), 320–337.

    Google Scholar 

  • Delmar, F., & Davidsson, P. (2000). Where do they come from? Prevalence and characteristics of nascent entrepreneurs. Entrepreneurship and Regional Development, 12(1), 1–23.

    Google Scholar 

  • Desai, S., & Acs, Z. J. (2007). A theory of destructive entrepreneurship. Jena Economic Research Paper. https://doi.org/10.2139/ssrn.1029648

    Article  Google Scholar 

  • Drabek, Z., & Payne, W. (2002). The impact of transparency on foreign direct investment. Journal of Economic Integration, 17, 777–810.

    Google Scholar 

  • Estrin, S., Korosteleva, J., & Mickiewicz, T. (2013). Which institutions encourage entrepreneurial growth aspirations? Journal of Business Venturing, 28(4), 564–580.

    Google Scholar 

  • Feld, B. (2012). Start-up communities: Building an entrepreneurial ecosystem in your city. Wiley.

    Google Scholar 

  • Feldman, M. (1994). Knowledge complementarity and innovation. Small Business Economics, 6(3), 363–372.

    Google Scholar 

  • Fischer, M. M., & Nijkamp, P. (1988). The role of small firms for regional revitalization. The Annals of Regional Science, 22(1), 28–42.

    Google Scholar 

  • Florida, R. (2002). The economic geography of talent. Annals of the Association of American Geographers, 92(4), 743–755.

    Google Scholar 

  • Forsbaeck, J., & Oxelheim, L. (2006). Transparency, capital formation and economic growth. Corporate and institutional Transparency for economic growth in Europe, 1–45.

  • Fritsch, M. (1997). New firms and regional employment change. Small Business Economics, 9, 437–448.

    Google Scholar 

  • Gauthier, J. F., Penzel, M., & Marmer, M. (2017). Global startup ecosystem report 2017. Startup Genome.

    Google Scholar 

  • Henry, N., & Pinch, S. (2000). Spatialising knowledge: Placing the knowledge community of Motor Sport Valley. Geoforum, 31(2), 191–208.

    Google Scholar 

  • International Accounting Standards Board. (2007). International Financial Reporting Standards 2007 (including International Accounting Standards (IAS(tm)) and Interpretations as at 1 January 2007). LexisNexis.

    Google Scholar 

  • Isenberg, D. J. (2010). How to start an entrepreneurial revolution. Harvard Business Review, 88(6), 41–50.

    Google Scholar 

  • Isenberg, D. J. (2011). The entrepreneurship ecosystem strategy as a new paradigm for economy policy: Principles for cultivating entrepreneurship-Babson entrepreneurship ecosystem project. Babson College.

    Google Scholar 

  • Isenberg, D. J. (2016). Applying the ecosystem metaphor to entrepreneurship: Uses and abuses. The Antitrust Bulletin, 61(4), 564–573. https://doi.org/10.1177/0003603X16676162

    Article  Google Scholar 

  • Jaffe, A. B. (1989). Real effects of academic research. The American Economic Review, 79(5), 957–970.

    Google Scholar 

  • Keeble, D., & Walker, S. (1994). New firms, small firms and dead firms: Spatial patterns and determinants in the United Kingdom. Regional Studies, 28(4), 411–427.

    Google Scholar 

  • Klepper, S. (2009). Spinoffs: A review and synthesis. European Management Review, 6, 159–171.

    Google Scholar 

  • Leff, N. H. (1964). Economic development through bureaucratic corruption. American Behavioral Scientist, 8(3), 8–14.

    Google Scholar 

  • Leitão, J., Alves, H., Krueger, N., & Park, J. (Eds.). (2018). Entrepreneurial, innovative and sustainable ecosystems: Best practices and implications for quality of life. New York: Springer.

    Google Scholar 

  • Levie, J., & Autio, E. (2008). A theoretical grounding and test of the GEM model. Small Business Economics, 31(3), 235–263.

    Google Scholar 

  • Leys, C. (1965). What is the Problem about Corruption? The Journal of Modern African Studies, 3(02), 215–230.

    Google Scholar 

  • Malecki, E. J. (2018). Entrepreneurship and entrepreneurial ecosystems. Geography Compass, 12(3), e12359.

    Google Scholar 

  • Mason, C., & Brown, R. (2014). Entrepreneurial ecosystems and growth oriented entrepreneurship. Paper prepared for a workshop of the OECD LEED Programme and the Dutch Ministry of Economic Affairs, The Hague, Netherlands, 7 November 2013.

  • Melton, J., Elkins, Z., Ginsburg, T., & Leetaru, K. (2013). On the interpretability of law: Lessons from decoding of national constitutions. British Journal of Political Science, 43(2), 399–423.

    Google Scholar 

  • Micucci, G., and Nuzzo, G. (2005). La misurazione del capitale sociale: un’analisi sulle regioni italiane. F. Signorini e M. Omiccioli (a cura di), Economie locali, modelli di agglomerazione e apertura internazionale: Nuove ricerche della Banca d'Italia sullo sviluppo territoriale, Il Mulino, Bologna.

  • Nahapiet, J., & Ghoshal, S. (1998). Social capital, intellectual capital, and the organization advantage. Academy of Management Review, 23, 242–266.

    Google Scholar 

  • Neck, H. M., Meyer, G. D., Cohen, B., & Corbett, A. C. (2004). An entrepreneurial system view of new venture creation. Journal of Small Business Management, 42, 190–208.

    Google Scholar 

  • Nicotra, M., Romano, M., Del Giudice, M., & Schillaci, C. E. (2018). The causal relation between entrepreneurial ecosystem and productive entrepreneurship: A measurement framework. The Journal of Technology Transfer, 43(3), 640–673.

    Google Scholar 

  • North, D. (1990). Institutions, institutional change and economic performance. Cambridge University Press.

    Google Scholar 

  • North, D. C., & Thomas, R. P. (1973). The rise of the western world: A new economic history. Cambridge University Press.

    Google Scholar 

  • O’Connor, A., & Reed, G. (2018). Theorizing the university governance role in an entrepreneurial ecosystem. Entrepreneurial ecosystems (pp. 81–100). Springer.

    Google Scholar 

  • Ovaska, T., & Sobel, R. S. (2005). Entrepreneurship in post-socialist economies. Journal of Private Enterprise, 21(1), 8–28.

    Google Scholar 

  • Pattueli, R., Santarelli, E., & Tabudji, A. (2020). Entrepreneurial intention among high-school students: The importance of papers, peers and neighbors. Eurasian Business Review, 10(2), 225–251.

    Google Scholar 

  • Picci, L. (2005). Corruption measurement and control: Towards a unified approach. In IV Global Forum on Fighting Corruption, Brasília, Brazil (pp. 7–10).

  • Piergiovanni, R., Carree, M. A., & Santarelli, E. (2012). Creative industries, new business formation, and regional economic growth. Small Business Economics, 39, 539–560.

    Google Scholar 

  • Powell, W., & Colyvas, J. (2008). Microfoundations of institutional theory. In R. Greenwood, C. Oliver, K. Sahlin, & R. Suddaby (Eds.), Sage handbook of organizational institutionalism (pp. 276–298). Sage Publishing.

    Google Scholar 

  • Putnam, R. (1993). La tradizione civica delle regioni italiane. Mondadori.

    Google Scholar 

  • Putnam, R. (2000). Bowling alone: The collapse and revival of American community. New York: Touchstone Books. Regional Studies, 28(4), 429–442.

    Google Scholar 

  • Reynolds, P. (1994). Autonomous firm dynamics and economic growth in the United States, 1986–1990. Regional Studies, 28(4), 429–442.

    Google Scholar 

  • Romano, M., Del Giudice, M., & Nicotra, M. (2014). Knowledge creation and exploitation in Italian Universities: The role of internal policies for patent activity. Journal of Knowledge Management, 18, 952–970.

    Google Scholar 

  • Sato, Y., Tabuchi, T., & Yamamoto, K. (2012). Market size and entrepreneurship. Journal of Economic Geography, 12, 1139–1166.

    Google Scholar 

  • Schillaci, C. E., & Nicotra, M. (2010). Rowing against the tide: The struggle to enhance entrepreneurship in a hostile region. In G. Dossena (Ed.), Entrepreneurship today (pp. 143–162). McGraw-Hill.

    Google Scholar 

  • Schumpeter, J. (1934). The theory of economic development. Transaction Publishers.

    Google Scholar 

  • Shane, S. (2009). Why encouraging more people to become entrepreneurs is bad public policy. Small Business Economics, 33(2), 141–149.

    Google Scholar 

  • Shane, S., & Venkataraman, S. (2000). The promise of entrepreneurship as a field of research. Academy of Management Review, 25(1), 217–226. https://doi.org/10.5465/AMR.2000.2791611

    Article  Google Scholar 

  • Spigel, B. (2017). The relational organization of entrepreneurial ecosystems. Entrepreneurship Theory and Practice, 41(1), 49–72.

    Google Scholar 

  • Spigel, B., & Harrison, R. (2018). Toward a process theory of entrepreneurial ecosystems. Strategic Entrepreneurship Journal, 12(1), 151–168.

    Google Scholar 

  • Spilling, O. R. (1996). Regional variation of new firm formation: The Norwegian case. Entrepreneurship and Regional Development, 8(3), 217–244.

    Google Scholar 

  • Stam, E. (2014). The Dutch entrepreneurial ecosystem. Available at SSRN 2473475.

  • Stam, E. (2015). Entrepreneurial ecosystems and regional policy: A sympathetic critique. European Planning Studies, 23(9), 1759–1769.

    Google Scholar 

  • Stam, E. (2018). Measuring entrepreneurial ecosystems. Entrepreneurial ecosystems (pp. 173–197). Springer.

    Google Scholar 

  • Stam, E., & Spigel, B. (2016). Entrepreneurial ecosystems and regional policy. Sage handbook for entrepreneurship and small business. SAGE.

    Google Scholar 

  • Stam, E., & Spigel, B. (2017). Entrepreneurial ecosystems. In R. Blackburn, D. De Clercq, J. Heinonen, & Z. Wang (Eds.), Handbook for entrepreneurship and small business. SAGE.

    Google Scholar 

  • Stangler, D., & Bell-Masterson, J. (2015). Measuring an entrepreneurial ecosystem. Kauffman Foundation series on city, metro and regional entrepreneurship. Kauffman Foundation.

    Google Scholar 

  • Sternberg, R. (2012). Do EU regional policies favour regional entrepreneurship? Empirical evidence from Spain and Germany. European Planning Studies, 20(4), 583–608.

    Google Scholar 

  • Van de Ven, A. H. (1993). The development of an infrastructure for entrepreneurship. Journal of Business Venturing, 8, 211–230.

    Google Scholar 

  • Wagner, J., & Sternberg, R. (2004). Start-up activities, individual characteristics, and the regional milieu: Lessons for entrepreneurship support policies from German micro data. Annals of Regional Science, 38, 219–240.

    Google Scholar 

  • Woodward, D. P. (1992). Locational determinants of Japanese manufacturing start-ups in the United States. Southern Economic Journal, 58, 690–708.

    Google Scholar 

  • World Economic Forum. (2013). Entrepreneurial ecosystems around the globe and company growth dynamics. World Economic Forum.

    Google Scholar 

Download references

Funding

The Portuguese Foundation for Science and Technology (Grants and NECE-UIDB/04,630/2020) provided financial support for this study.

Author information

Authors and Affiliations

  1. University of Jena, Jena, Germany

    Muhammad Faraz Riaz

  2. GC University Faisalabad, Faisalabad, Pakistan

    Muhammad Faraz Riaz

  3. Department of Management and Economics, NECE-Research Center in Business Sciences, Faculty of Human and Social Sciences, University of Beira Interior, Estrada do Sineiro, 6200 209, Covilhã, Portugal

    João Leitão

  4. CEG-IST, Instituto Superior Técnico and ICS, Instituto de Ciências Sociais, University of Lisbon, Lisbon, Portugal

    João Leitão

  5. CYFE - Center for Young and Family Enterprise, Università Degli Studi Di Bergamo, 24044, Dalmine, Bg, Italy

    João Leitão

  6. Faculty of Economics and Business Administration, Friedrich Schiller University Jena, Jena, Germany

    Uwe Cantner

  7. Department of Marketing and Management, University of Southern Denmark, Odense, Denmark

    Uwe Cantner

Authors
  1. Muhammad Faraz Riaz
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. João Leitão
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Uwe Cantner
    View author publications

    You can also search for this author in PubMed Google Scholar

Contributions

All authors contributed to the study conception and design. Material preparation, data collection and analysis were performed by MFR, JL and UC. The first draft of the manuscript was written by MFR and all authors commented on previous versions of the manuscript. All authors read and approved the final manuscript. All authors agreed with the content and gave explicit consent to submit. In addition, they obtained consent from the responsible authorities at the university where the work has been carried out, before the work is submitted.

Corresponding author

Correspondence to João Leitão.

Ethics declarations

Conflict of interest

The authors have no potential conflicts of interest to declare.

Human participants and/or animals

They declare also that the research is not involving human participants and/or animals.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Supplementary Information

Below is the link to the electronic supplementary material.

Supplementary file1 (DOCX 39 KB)

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Riaz, M.F., Leitão, J. & Cantner, U. Measuring the efficiency of an entrepreneurial ecosystem at municipality level: does institutional transparency play a moderating role?. Eurasian Bus Rev 12, 151–176 (2022). https://doi.org/10.1007/s40821-021-00194-w

Download citation

  • Received:

  • Revised:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s40821-021-00194-w

Keywords

Search

Navigation