Entrepreneurial ecosystems in conflict regions: evidence from Ukraine

Abstract

Entrepreneurship is a productive force of innovation and economic development. However, in post-conflict regions, there is a greater challenge in allocating entrepreneurial talent to productive entrepreneurship. In this study, we examine the entrepreneurship ecosystem, which is built on the “bottom-up” principles to understand whether its pillars can facilitate productive entrepreneurship in two Ukrainian regions shaken by multiple revolutions and regime change. We introduce a model that puts entrepreneurial conditions in cities and formal institutional changes to a competitive test. Building on the regional entrepreneurship literature, we perform an empirical study in a developing country to reveal what drives productive entrepreneurship in post-conflict regions with entrepreneurship culture, formal networks, debt and equity financing emerging as important determinants of productive entrepreneurship. The effect of formal institutions is significant but highly correlated with rent-seeking behavior of government and corruption. Our analysis suggests that the entrepreneurial conditions in regions focusing on the bottom-up processes of supporting entrepreneurship should work better to enhance productive entrepreneurship activity in a post-conflict region.

Role of entrepreneurial ecosystems to productive entrepreneurship

“…In my city (region), There is a growth-oriented (strong and productive) entrepreneurship ecosystem [20], [21]. In my region (city), There is a adequate formal network to back up entrepreneurship ecosystem [22].…”

“…Research on the role of ecosystem entrepreneurship has been identified with two approaches. First, it was measured toward each element's contributions [19], [20], [22], [25]. Second, some authors calculated it with an indexing approach that divided in into three measurements such as additive [18], [21], [24], multiplicative [11], and logarithmic [12].…”