Where is the link between entrepreneurial ecosystem components and country's innovation output? A global study

Abstract

Purpose: The aim of the research is to detect the relationship between entrepreneurial ecosystem (EE) components and innovation output of countries, and to determine whether the strength of this relationship depends on country's cluster affiliation at different income levels. Design/methodology/approach: To globally examine the strength of relationship between EE elements and innovation output, we analysed the correlation between the pillars of Global Entrepreneurship Index (GEI) and Global Innovation Index (GII) output sub index. To analyse if this relationship depends on income level (thus, development level) of a country, we divided countries into clusters and repeated the process in these separate groups. The analysis was performed on a set of 117 countries that are ranked in both GEI and GII report for 2019. Findings: The results show a significant moderate to high positive correlation between EE dimensions and innovation output (both Creative output and Knowledge and technology output). Technology Absorption and Process Innovation show the strongest relationship with the examined innovation output measures. Additionally, the results show that this relationship considerably varies among the observed groups of countries clustered by the income level. Research/practical implications: The results can be used by policymakers to get more insights on the ecosystem institutional framework relationship with country's innovation output. By further deeper examination of concrete indicators feeding into these pillars, implications can be derived for the ecosystem improvements. This implies that it is possible to identify the domains of the EE that could be strengthened for better innovation performance of a country. It is also shown that there is a rationale behind observation of countries by their income level, for creating appropriate strategic directions for boosting innovation output through strengthening their EE. Originality/value: The results of the empirical research show the relationship between the EE components and innovation output and how the relationship varies across countries based on their level of development (income). The results are based on the data of globally recognized and widely applied methodologies, GEI and GII (Innovation Output Sub index).