Fostering Productive Entrepreneurship Communities: Key Lessons on Generating Jobs, Economic Growth, and Innovation

This study is one of the first research projects to use network analyses to assess the collective impact of founders, investors, and other actors in entrepreneurship communities. These analyses revealed findings that are likely to surprise many people working in the entrepreneurship field.

Recently produced by Endeavor Insights, this study shares five critical lessons on entrepreneurship communities and productivity. This study also offers practical recommendations that decision-makers can use to implement Entrepreneur-Led Economic Development in cities across the world.

Lesson 1: Entrepreneurship Communities are not Predestined to Follow a Single Development Path

The stories of Bangalore and Nairobi contain a number of lessons for decision-makers around the world. One of the most important principles they demonstrate is something that can be seen in Silicon Valley, London, Singapore, and many other cities: entrepreneurship communities are not predestined to follow a single development path. Bangalore and Nairobi represent very different models of entrepreneurship community development. >>> READ MORE

Lesson 2: Entrepreneurship Communities Become Productive by Generating a Relatively Small Number of Companies that Reach Scale

Before investigating the collective impact of local actors on productivity, it is important to understand how productivity is created in entrepreneurship communities. Some entrepreneurship communities are much more productive than others. These differences translate to thousands of more jobs, millions of more dollars in economic growth, and a dramatically greater distribution of new innovations. >>> READ MORE

Lesson 3: Entrepreneurs at the Fastest-Growing Companies are Much More Likely to have Received Experience, Support and Investment from Leaders of Companies that Reached Scale

These connections came in three forms: experience via previous employment, support through mentorship, or early-stage investment. Each relationship seems to be quite powerful. Receiving experience, mentorship, or investment from an entrepreneur who has led a company to scale was associated with approximately two times greater prevalence of top performance.‡ Interviews with top-performing local founders offer context for interpreting the meaning of this association. These relationships are usually longstanding — typically predating a firm’s current performance by several years or more. In addition, the entrepreneurs receiving these connections often credited them with providing knowledge and skills that were critical to the growth of their businesses. >>> READ MORE

Lesson 4: Patterns of Influence Shape the Development of Entrepreneurship Communities

Network analyses offer useful tools for evaluating the collective impact of these relationships. These analyses make it possible to track the movement of people, knowledge, and capital within an entrepreneurship community and assess how these factors are associated with increases or decreases in productivity. Networks influence almost every aspect of human life from emotional well-being to educational achievement to physical health. They have also been shown to have an especially strong impact on economic activities. Networks shape people’s ability to find a new job, decisions individuals make about banking services and even the likelihood that a business survives. >>> READ MORE

Lesson 5: When People Who Have Led Firms that Scaled are More Influential, it Empowers Entrepreneurship Communities to be More Productive

In entrepreneurship networks, this fact leads to an under-appreciated truth: when decision-makers choose to elevate the influence of certain types of actors, they are also implicitly deciding to decrease the relative influence of others. >>> READ MORE