Innovation Ecosystems: Definition, Types, Examples

Milthon Lujan Monja

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Innovation ecosystems have become an important strategy within innovation promotion policies. It is now recognized that achieving and sustaining economic development depends on the diversity and linkage among actors (government, civil society, private sector, universities, entrepreneurs, among others).

The term “innovation ecosystems” has become popular in industry, academia, and government (Oh et al., 2016). Stimulating the emergence of an innovation ecosystem has become a necessity for revitalizing a traditional industry; thus, entrepreneurship and public policy approaches are required to drive these spaces.

On the other hand, in innovation studies, the concept of “innovation systems” is widely used, often with different qualifiers such as national innovation system or sectoral innovation systems.

The U.S. innovation ecosystem is one of the most well-known globally and stands as a key example of the importance of innovation in promoting economic development. However, successful ecosystems like those in Singapore and São Paulo are emerging.

In this article, we will provide some definitions of innovation ecosystems; we will also describe the different types, the roles of different ecosystem actors, and a tool that will help you model them.

What is an innovation ecosystem?

There is a wide range of definitions of innovation ecosystems in scientific literature. Granstrand and Holgersson (2020) emphasize that definitions of innovation ecosystems often focus on collaboration/complementation and actors.

It is important to note that “innovation ecosystem” is the term used to describe the various actors, stakeholders, and community members that are essential for innovation (Millard, 2018). Thus, innovation ecosystems are dynamic networks that foster collaboration among startups, entrepreneurs, companies, universities, and governments.

“An innovation ecosystem includes a group of actors, activities, and artifacts (products and services, tangible and intangible resources, technological and non-technological resources), and institutions and relationships, including complementary and substitutable relationships, that are important for the innovative performance of an actor or a population of actors,” define Granstrand and Holgersson (2020). Similarly, Budden and Murray (2022) define innovation ecosystems as “places that involve five types of stakeholders (research institutions, entrepreneurs, corporations, investors, and governments) linked by a strong social fabric of mutual interest, needs, and complementary resources and trust.”

Meanwhile, Klimas and Czakon (2021) define the innovation ecosystem as “the cooperative environment surrounding the evolving joint innovation activities of its actors, organized through co-innovation processes, and resulting in the co-creation of new value through innovation.”

In this regard, Andreu (2019) highlights that a business innovation ecosystem aims to create an environment where the efforts, perspectives, and potentials of different organizations are combined to go beyond the limits of each entity and, through collaboration, transform knowledge into innovation.

Types of innovation ecosystems

There are different types of innovation ecosystems, each with its own characteristics:

  • Closed innovation ecosystems: These are controlled by a company or group of companies.
  • Open innovation ecosystems: These are open to the participation of any actor who wants to contribute. An example of this type of innovation ecosystem is AstraZeneca’s initiative (Remneland and Styhre, 2023).
  • Regional innovation ecosystems: Concentrate on a specific region, such as a city or state. Cao et al. (2023) propose a methodology for developing the regional innovation ecosystem of Beijing-Tianjin-Hebei.
  • Sectoral innovation ecosystems: Focus on a specific sector, such as technology or health. de O. Carneiro et al. (2023) proposed an analytical matrix framework of the innovation ecosystem for the public sector.

On the other hand, Klimas and Czakon (2021) identified 34 different types of innovation ecosystems in their research: intentional (deliberate, planned), emergent (implicit), orchestrated (hierarchical), collectively coordinated (heterarchical), emergent, evolutionary, mature, declining, death, corporation-dominated, university-dominated, metaorganizational, centralized, decentralized, egocentric (company-centered; hub-based), microscopic, middlescopic, macroscopic, focused on radical innovation, focused on incremental innovation, focused on pioneering innovations, high technology, multi-platform, innovation districts/city-based, local, regional, national, international, global, digital (clicks only), successful (strong), promising, profitable, and sustainable.

Adopting an ecosystem approach

An important feature of innovation ecosystems is the interactions between public and private actors in a knowledge-intensive innovation ecosystem that creates new innovation opportunities, along with new markets (Gifford et al., 2021).

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According to the International Development Innovation Alliance (IDIA), adopting an ecosystem approach to innovation recognizes that:

  • An innovation ecosystem is formed by different actors, relationships, and resources that play a role in bringing a great idea to transformative impact at scale.
  • Other parts of the system moderate the effectiveness of each part within the innovation ecosystem.
  • A change in one part of the innovation ecosystem leads to changes in other parts of the ecosystem.

Dorie and Lavie (2023) indicate that for the emergence of an innovation ecosystem, organizational barriers must be overcome, cooperation must be adopted, and solid enabling and governance mechanisms must be implemented to nurture the ecosystem; while Thomas and Autio (2019) highlight that innovation ecosystems are distinguished from other organizational collectives by their governance system and the specificity of their outcomes.

Importance of innovation ecosystems

At this point, we must answer the question: What is the importance of an innovation ecosystem?

Innovation ecosystems create an active flow of information and resources for ideas to become reality (Millard, 2018), which is an important element for the interaction of the different actors in the ecosystem. Song (2023) found that the cooperation of SMEs with universities and research institutions positively affects the capacity for independent and collaborative innovation.

The value of an innovation ecosystem depends on access to resources for entrepreneurs and the flow of information for ecosystem stakeholders. According to Millard (2018), the flow of information creates more investment opportunities; while Marcon et al. (2023) emphasize that participating in an innovation ecosystem is particularly beneficial for technological innovation when new companies must deal with rapidly changing, less predictable, and low-profit markets.

A company’s participation in an innovation ecosystem can increase its competitiveness and potential in turbulent circumstances (Zhang et al., 2023). Thus, innovation ecosystems become a support for companies in times of crisis.

Key elements of an innovation ecosystem

For an innovation ecosystem to be successful, it must have a series of key elements:

  • Startups and entrepreneurs: They are the heart of the ecosystem, bringing creativity, energy, and new ideas.
  • Companies and institutions: They provide financial support, expertise, and resources to startups.
  • Infrastructure and resources: These include workspaces, laboratories, research centers, and access to capital.
  • Culture of innovation: It is characterized by openness to risk, tolerance for failure, and collaboration.
  • Collaboration and networking: Interaction among the different actors in the ecosystem is fundamental to its success.

Roles in an innovation ecosystem

Millard (2018) emphasizes that an innovation ecosystem includes universities, government, corporations, accelerators, investors, foundations, entrepreneurs, mentors, and the press; and that each of the different actors plays an important role in creating value through the transformation of new ideas into reality.

On the other hand, Andreu (2019) describes the following six roles in an innovation ecosystem:

Articulators

Ensure the creation of spaces and platforms for different actors to collaborate actively. They can be: Government agencies, institutions, NGOs, etc.

Connectors

Aim to connect organizations with similar interests so they can leverage synergies and gain greater momentum among them. They can be: Business chambers, industrial councils, etc.

Enablers

Provide resources (tools, financial resources, infrastructure, talent, consultancy, among others) to the ecosystem to enhance the development of new innovative projects within or outside the habitat itself. They can be: Incubators, accelerators, investment funds, training centers, coworking spaces, etc.

Knowledge generators

Generate knowledge and drive the creation of new projects and innovative technologies. They can be: Development centers, research centers, design centers, or research and development departments at universities, etc.

Promoters

This role is often carried out by the media, aiming to disseminate entrepreneurship to achieve scalability of ecosystems and foster a culture of innovation.

Communities

Created with the purpose of sharing knowledge and supporting each other. They grow and develop beyond government policies, providing stability and sustainability to the ecosystem.

Characteristics of innovation ecosystems

Thomas and Autio (2019) distinguish four main characteristics of innovation ecosystems:

  • Heterogeneity: The ecosystem consists of heterogeneous participants in various roles.
  • System-level outcomes: The system’s outcome is greater than what any individual participant can achieve.
  • Interdependence among actors: It can be technological interdependence, economic interdependence, and cognitive perspectives.
  • The challenge of ecosystem governance
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Modeling an innovation ecosystem

Talmar et al. (2020) propose a tool for modeling an innovation ecosystem. They call it the “Ecosystem Pie Model (EPM)” and include the following constructs:

Ecosystem level

EL: 1. Ecosystem value proposition

EL: 2. User segments

EL: 3. Actors

Actor level

AL: 1. Resources

AL: 2. Activities

AL: 3. Value addition

AL: 4. Value capture

AL: 5. Dependency

AL: 6. Risks

The Ecosystem Pie Model tool for designing innovation ecosystems (Talmar et al., 2020).
The Ecosystem Pie Model tool for designing innovation ecosystems (Talmar et al., 2020).

How to Build an Innovation Ecosystem?

Developing an innovation ecosystem requires the involvement of many actors. In this regard, Paasi et al. (2023) report that the key factors for building an innovation ecosystem can be grouped into three categories: ecosystem actors, ecosystem properties and environment, and outcomes.

On the other hand, Davis et al. (2023), from McKinsey & Company, indicate that building an innovation ecosystem comprises six key actions:

  • Establish an aspirational vision: Defining a unique and differentiated identity and brand crystallizes the intangibles of an ecosystem. It establishes a value proposition for both people and businesses.
  • Focus on specific sectors or partners: Ecosystems can focus on specific sectors and subsectors, for example, electric vehicles, advanced air mobility, or medical devices. Or they can focus on functions, such as artificial intelligence or the Internet of Things (IoT), across multiple sectors.
  • Promote critical mass of venture capital and startups: Development in four key areas: idea generation and R&D, commercialization and company creation, and early-stage development and growth.
  • Develop a talent attraction and workforce strategy: Leaders in the public and private sectors can create partnerships and collaborations with a variety of institutions, including four-year and two-year universities, training providers, and community organizations supporting greater access. Similarly, Heaton et al. (2019) highlight the important role universities play in innovation ecosystems in developing human capital and generating technology.
  • Design high-quality infrastructure and livability: The appeal of an innovation ecosystem is anchored in two types of infrastructure: first, physical and virtual infrastructure aligned with the specific needs of prioritized sectors; and second, “place-making” infrastructure that informs quality of life.
  • Cultivate a vibrant and diverse community and sense of belonging.

Examples of Innovation Ecosystems

The importance of innovation ecosystems in driving development has led various actors to promote linking spaces. There are many examples worldwide; below we will describe some studies.

Telecommunication

Granstrand and Holgersson (2020) describe the case of the development of the mobile telecommunications system, where they highlight that the “artifact system” was radically transformed through creative destruction.

Fashion

The research findings of Zeng et al. (2024) suggest that the innovation ecosystem is an inclusive, constructive, and systematic lens and contributes to fashion innovation management.

Smart Cities

Wirtz and Müller (2023) and Appio et al. (2019) describe smart city models as examples of innovation ecosystems. Researchers highlight that “smart city” initiatives aim to provide more efficient services to citizens.

Oskam et al. (2019) indicates that smart city projects employ sustainable technology to contribute to solving societal challenges; while Appio et al. (2019) highlights that smart city infrastructure can create a unique collaboration ecosystem in which different actors can develop innovative products, services, and solutions.

Health

Iyama et al. (2017) describe the experiences of innovation ecosystems in health in both developed and developing countries, and propose a guide for their implementation.

On the other hand, the following open innovation ecosystems are the most successful and well-known:

  • Silicon Valley (USA)
  • Tel Aviv (Israel)
  • Shenzhen (China)

Conclusion

Innovation ecosystems are a powerful tool for economic development. By fostering collaboration among startups, entrepreneurs, companies, and institutions, these ecosystems can create an enabling environment for generating new ideas and businesses, ultimately leading to sustainable and inclusive economic growth.

In this regard, government policies should be oriented towards promoting these ecosystems for the benefits they offer for local, regional, and national development.

References

Andreu I. 2019. ¿Qué es un ecosistema de innovación y qué roles existen? APD

Appio F., M. Lima, S. Paroutis. 2019. Understanding Smart Cities: Innovation ecosystems, technological advancements, and societal challenges. Technological Forecasting & Social Change, 142.

Budden Philip and Fiona Murray. 2022. Strategically Engaging With Innovation Ecosystems. MIT Sloan Management Review.

Cao, Y., Liu, J., Yang, Y., Liu, X., Liu, Z., Lv, N., Ma, H., Wang, Z., & Li, H. (2023). Construct a Regional Innovation Ecosystem: A Case Study of the Beijing-Tianjin-Hebei Region in China. Sustainability, 15(9), 7099. https://doi.org/10.3390/su15097099

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Davis Cameron , Ben Safran, Rachel Schaff, and Lauren Yayboke. 2023. Building innovation ecosystems: Accelerating tech hub growth. McKinsey & Company

de O. Carneiro, D. K., Isidro Filho, A., & Criado, J. I. (2023). Public Sector Innovation Ecosystems: A Proposition for Theoretical-Conceptual Integration. International Journal of Public Administration, 1-14.

Drori, I. and Lavie, D. (2023), How Do Innovation Ecosystems Emerge? The Case of Nanotechnology in Israel. J. Manage. Stud.. https://doi.org/10.1111/joms.13026

Gifford Ethan, Maureen McKelvey & Rögnvaldur Saemundsson (2021) The evolution of knowledge-intensive innovation ecosystems: co-evolving entrepreneurial activity and innovation policy in the West Swedish maritime system, Industry and Innovation, 28:5, 651-676, DOI: 10.1080/13662716.2020.1856047

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Heaton S., D. Siegel and D. Teece. 2019. Universities and innovation ecosystems: a dynamic capabilities perspective. Industrial and Corporate Change, 2019, 1–19. doi: 10.1093/icc/dtz038

International Development Innovation Alliance (IDIA). What is an Innovation Ecosystem?

Iyama G., M. Herselman, A. Botha. 2017. A Scoping Review of Digital Health Innovation Ecosystems in Developed and Developing Countries. IST-Africa 2017 Conference Proceedings. Paul Cunningham and Miriam Cunningham (Eds). IIMC International Information Management Corporation, 2017

Klimas, P., Czakon, W. Species in the wild: a typology of innovation ecosystems. Rev Manag Sci (2021). https://doi.org/10.1007/s11846-020-00439-4

Marcon Arthur, José Luis Duarte Ribeiro, Yasmin Olteanu, Klaus Fichter. 2023. How the interplay between innovation ecosystems and market contingency factors impacts startup innovation, Technology in Society, 2023, 102424, ISSN 0160-791X, https://doi.org/10.1016/j.techsoc.2023.102424.

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