Abstract
Start-ups play a pivotal role in fostering innovation and driving progress in various countries. Start-ups are often at the forefront of innovation. Start-ups are newly established businesses or may be extension of existing enterprises with novel or innovative ideas. They are typically founded by entrepreneurs aiming to develop innovative products, services or business models. While the importance of entrepreneurs and new firms in modifying the use of resources for enhanced productivity has been established in practice since the Industrial Revolution, and the critical role of entrepreneurs and entrepreneurial firms in innovation has been conceptually immortalised since the work of Schumpeter, start-ups have become prominent in the last two decades as agents of disruptive innovation and change that can transform whole industries. Particularly with the advent of digital technologies and digital transformation, start-ups have captured public imagination, policy focus and research attention. The current phase of AI revolution is further exacerbating this trend.
Start-ups are known for their developing innovative ideas, technologies and solutions to various industrial and non-industrial problems; taking risks in an environment of uncertainty; finding investors; and networking with talents towards putting their businesses into viable markets. These companies are characterised by their drive for growth, often in terms of scalability and disruption within their respective industries. Countries that support and nurture start-up ecosystems through policies, funding, infrastructure and mentorship programs often see a surge in innovation and economic growth. They attract talent, investment and cutting-edge technologies, ultimately giving them a competitive edge in the global market. Universities as frontiers of innovation, particularly the surrounding science or innovation parks, have come to play a significant part in this strategy of promoting start-ups.
Of course, the potential impact of start-ups in technological innovation and growth is not new. The pioneering role of Silicon Valley since the 1950s as the locus of successive waves of innovation in the high technology industry has for years captured the attention of researchers and policymakers. Several countries have tried to replicate the cluster of start-ups, leading academic institutions and venture capital that has powered Silicon Valley’s success. One can witness such versions of Silicon Valley in China, Taiwan, Singapore, India, Australia and South Korea. At the same time, it is widely recognised that the innovation outcomes of regions or nations are influenced by the interplay of policies, institutions and organisations that promote start-ups with various public incentive structures. Enhancing innovation, whether it be for growth or social and human development therefore requires adopting a systems view. Players in this innovation system include the government, academic institutions, research laboratories, established firms and, of course, start-ups.
Governments and local authorities often play a role in nurturing these ecosystems by creating favourable regulatory environments, providing infrastructure, offering incentives and fostering collaboration among stakeholders. A robust innovation ecosystem not only benefits start-ups but also contributes to the broader economy by driving technological advancements, enhancing competitiveness and addressing societal challenges through innovative solutions. Start-ups, especially as they grow, play a role in strengthening the innovation ecosystem itself. They might become investors, mentors or collaborators for newer start-ups, creating a cycle of support and growth within the ecosystem.
Buoyed by the justification to overcome market failure, traditional government policies have tended to focus on supporting research and development in academia and research institutions to push the ‘endless frontier’ of human capacity. With a few exceptions such R&D or innovation support policies have generally remained separate from industrial policy with some countries eschewing the latter altogether. With start-ups coming of age and becoming important vehicles of S&T- and R&D-driven innovation, they have emerged as a separate arena for policy action. Three main factors come into sharp focus, namely, the national innovation system (NIS) in a specific country that is relevant for start-ups; specific innovation strategies enunciated by countries in nurturing the growth of start-ups in the last decade; and the role of government and business enterprises including the venture capital. Not surprisingly, this development has raised several questions:
What is (and is not) a start-up? Are all start-ups necessarily innovative? Is the role of an innovative start-up to develop technology or to commercialise it or both? Should policy be focused only on innovative start-ups or all start-ups? How does the government identify start-ups that deserve policy support? Is policy intervention necessary at all or are there other things the government needs to prioritise to enable a conducive environment for start-ups? Is a start-up policy an adjunct of R&D policy or of industrial policy or of both? How can start-up policies be integrated with other innovation policies so as to facilitate collaboration and integration? Should government policy be focused on direct support measures such as grants and subsidies or on indirect ones such as promoting entrepreneurship education, creating a conducive environment for business, catalysing business and technology incubators or removing the barriers to angel investment or venture capital? What is the role of universities in start-up creation? Do national or regional education policies and regulatory frameworks need to be modified to enable universities to play a more central role in start-up creation and growth?
Different countries have looked at these and a set of related questions in myriad ways, influenced by ideology, path dependence and national priorities. Related aspects include incubation and entrepreneurial skill development, funding, spin-offs from firms, R&D institutions and universities, research parks (and other forms of agglomeration or co-location), scaling-up and intellectual property rights. In this special issue, we have brought together a set of expert scholars from across the world who have studied in depth the evolution of start-ups in their respective geographies—Australia, Brazil, China, India, the Republic of Korea, Thailand and Vietnam. Some of these scholars have focused on conceptual issues (e.g., how do we relate the National Systems of Innovation lens to the start-up ecosystem perspective) while others have focused on the policy priorities of their respective countries and the outcomes in terms of start-up creation and growth. While rapid growth of start-ups in the last decade is a common thread across all the countries studied, some common trends we see across the papers are the evolution of new legal, regulatory and developmental statutes and frameworks focused on start-up creation; the influence of contextual factors on start-up policies and outcomes, and regional and sectoral variations in the growth of start-ups.
Some articles (Australia, Brazil and Korea) throw light on the political economy of policies supporting innovation in general and start-ups in particular. Others contrast the role of federal and regional or state governments. The changing locus of start-up policies (within the Ministry of S&T or Education or Industry or through cross-cutting task forces or other organisational mechanisms) is highlighted by many authors while some explore the role of large companies and industry associations in developing the start-up ecosystem. Many authors seek to relate the evolving start-up ecosystem to broader regional and national innovation ecosystems and explore the extent to which policies are integrative and system-oriented rather than fragmented and entity-driven. Growth and scale-up challenges are common factors across many of the countries studied for the papers in this issue. And, the most successful start-ups in terms of valuation are often those that have pursued emerging market opportunities such as fintech and food delivery rather than developing cutting-edge technology. Here are a few noteworthy insights gleaned from the case studies.
D. Cetindamar, C. Renando, Martin Bliemel and S. De Klerk in their paper on Australia, map the evolution of the Australian start-up and innovation ecosystem by exploring policy developments and mapping the key actors, activities and artefacts. The paper identifies five major gaps that need to be overcome for an ecosystem approach to flourish, such that the web of policies matches and supports the needs of the Australian ecosystem. These gaps relate to a lack of data; lack of aggressive or internationally competitive goals; narrow views of growth; lack of integration across levels in the system; and a lack of collaboration beyond dyadic relationships. The paper further draws attention to the exemplary successes of Melbourne and Sydney as vivid entrepreneurial ecosystems at the city level. The authors underline how their state government’s investment in R&D and collaborations paid off. Here, the role of universities is highlighted. For instance, the University of Melbourne’s, incubator Melbourne Connect and Bio-Innovation Hub, and five of Australia’s largest medical research institutes have ranked Melbourne as one of the top five Life Sciences hubs in Asia-Pacific.
The research conducted by Pun-Arj Chairatana, Kritsapas Kanjanamekanant and Siwagorn Limwathanagura on Thailand’s start-up ecosystem advocates for the decentralisation of innovation policies and ecosystems. This shift is proposed as a means to effectively navigate new challenges and uncertainties while aiding the recovery of socio-economic factors. The paper contends that decentralisation, coupled with open innovation and an ‘open’ ecosystem, offers distinct advantages over centralisation. It posits that collective ideas and perspectives outperform internal innovation processes, enabling better responsiveness to external changes compared to longer-term innovation policies dictated solely by the central government. The involvement of public–private participation emerges as a crucial factor within this strategy. The paper elucidates various types of start-ups pivotal to the decentralisation of innovations in Thailand, providing illustrative examples. Furthermore, it delves into the impediments and nuances hindering the development of the innovation ecosystem in Thailand. These discussions point towards future research directions aimed at addressing these challenges and steering the country’s innovation landscape in a more effective direction.
The paper from China sheds light on the dynamic impact of Chinese policies in propelling the growth of start-ups. Xinpei Zhang and Gaofeng Yi delve into the period between 2013 and 2020, highlighting a remarkable surge in start-ups from 11.32 to 21.79 million firms. Among these, newly established enterprises escalated from 2.5 to 7.4 million. Predominantly, China’s burgeoning start-ups find their footing in the high-tech industry, with technology and IT sectors reigning as the primary business directions for these enterprises. A striking aspect of the Chinese study lies in the proliferation of over 300 Unicorns. Notably, universities have assumed a pivotal role by supplying talent and offering support for research endeavours catering to small and medium enterprises. However, the authors also pinpoint certain inherent shortcomings in the foundation of scientific and technological innovation. These include a deficiency in originality and the production of significant fundamental research. There exists a frail capacity for self-reliant innovation and an elevated reliance on foreign technology. Consequently, the authors advocate for an immediate and imperative need to enhance the overall innovation capacity of the industry.
The South Korean paper authored by Doek Soon Yim, Younghwan Kim and Wangdong Kim introduces a dynamic innovation system known as the Startup Innovation Ecosystem (SIE), which stands apart from the conventional NIS. This strategy highlights two key distinctions: First, the pace of technological innovation within SIE is notably faster, driven by younger, smaller organisations that exhibit a greater willingness to undertake risks compared to those within the traditional NIS. Second, SIE is characterised by its openness and its connection to the global innovation landscape. Success for start-ups within this framework often hinges on their ability to not just enter but thrive in the global market.
The paper identifies the Tech Incubator Program for Startups (TIPS) as one of South Korea’s most successful government policies aimed at constructing a collaborative start-up support ecosystem between the public and private sectors. TIPS focuses on leveraging public funding to enable the private sector to identify and nurture high-quality start-ups. Another example highlighted is the Center for Creative Economy Innovation (CCEI), strategically designed to cultivate start-ups by encouraging large companies to explore new business ventures and industries. This initiative aims to forge linkages between these established entities and start-ups across 17 regional governments, fostering collaboration within their supply chains.
Vikas Namadeva Prabhu, Srivardhini K. Jha and Rishikesha T. Krishnan, in their research focusing on India, examine the emergence of science and technology ventures (STVs) in the country through two distinct yet interconnected perspectives. First, they explore the NIS lens, which promotes a top-down, policy- driven approach aimed at fostering STVs. Second, they delve into the ecosystem perspective, emphasising the pivotal role of independent organisations in seeding and nurturing STVs. The paper uses the biotech sector as a case study to exemplify this integration. Drawing from this analysis, the study proposes targeted policy interventions at the sectoral level. Additionally, it advocates for a heightened emphasis on fostering innovation within individual firms, serving as a complement to investments made in fundamental research. The aim is to catalyse a wave of STVs across the country.
Antonio José Junqueira Botelho and Mariza Almeida’s research on Brazilian start-ups sheds light on the burgeoning growth of entrepreneurship and start-ups driven by a heightened societal awareness regarding their crucial role in the country’s socio-economic advancement. The paper emphasises the pivotal contribution of international agencies in nurturing the start-up ecosystem within Brazil. Notably, the launch of ‘Google for Startups’ programs in the country has reportedly led to the emergence of more than 250 start-ups. Additionally, the paper highlights the organisation of over 1,500 events—both virtual and on university campuses and corporate premises—focused on entrepreneurship, technology and innovation, training upwards of 30,000 individuals. The research also provides a comparative perspective, referencing an Organisation for Economic Co-operation and Development (OECD) survey that revealed a notably higher proportion of tech-based start-ups founded by individuals holding doctorates in countries like Switzerland, Denmark, Germany and the United States compared to Brazil. A critical gap highlighted in the Brazilian context pertains to entrepreneurship training, which is notably deficient in undergraduate university courses and virtually non-existent at the graduate level, particularly in technological entrepreneurship. This scarcity is primarily attributed to the higher education regulatory framework, which disincentivises efforts in this direction, primarily rewarding scientific publications instead.
The last case study is from Vietnam. The research conducted by Luong Van Thuong and Bach Tan Sinh on Vietnam underscores the pivotal role of the NIS and its multifaceted components. The paper primarily focuses on the influential impact of the economic policy culture, which actively fosters innovation, emphasising business enterprises’ role in bolstering competitiveness across various tiers. In Vietnam’s start-up strategies, universities assume significant importance. Recent years have witnessed universities catalysing a robust surge in entrepreneurial spirit among students. These institutions are actively engaged in forging connections with both domestic and international businesses to cultivate an environment conducive to strengthening the linkages between education, research and industry. Simultaneously, universities are playing an active role in collaborating with start-up support organisations to incubate students’ ideas and projects, facilitating environments for practical internships intertwined with business interactions. From a foresight perspective, the paper directs attention to the achievement of transformative innovation policy. It accentuates the involvement of social actors representing the ‘civic policy domain’, grassroots organisations, and a spectrum of individuals including citizen scientists, technologists, entrepreneurs and amateur investors. These emergent actors are recognised within the strategy, contributing to the innovative landscape as integral participants.