Innovation Overview
This study presents how resilience and innovativeness bring high-performance to the country’s entrepreneurial ecosystem.

Read and download the "Sustainability and Innovation in the Romanian Entrepreneurial Ecosystem" study.

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Executive summary(EN)
Executive summary(RO)

Paper quotation: "A. Curaj, M. Mitroi, C. Paul, E. Simion, O. Ionescu, R. Coscodaru, A. M. Dinu (2021) Sustainability and Innovation in the Romanian Entrepreneurial Ecosystem."

Today, resilience and innovativeness bring high-performance to the country’s entrepreneurial ecosystems. High-performant national entrepreneurial ecosystems are to be observed in countries of small dimensions, because they more easily facilitate strong collaboration between the ecosystem’s actors and support businesses to go international, as has happened in Denmark, Switzerland, Estonia, Israel or South Korea.

Key findings from the Innovation Entrepreneurial Ecosystem

Increasing Romania's competitiveness through innovation is difficult to achieve in the context of the continuous exodus of skilled labor. Romania ranks last in innovation in the U.E. and the country's performance in innovation continues to decline (e.g. EU Innovation Scoreboard, 2020).

Figure 7 Brain drain and the low attractiveness of the business ecosystem

Romania's innovative entrepreneurial ecosystem is insufficiently attractive compared to other countries that offer adequate support, including significant tax exemptions. The Romanian market is still poorly sophisticated for innovative products and services. The buyer sophistication indicator shows that Romania marks 3.07 on a scale from 1 to 7, below the global median value (World Bank, 2019). 

The lack of sophistication of the national market, the weak public procurement of innovation, along with other factors, impede the scale-up and internationalization, and stay as root causes for export of innovative businesses.

The Entrepreneurship Ecosystem Index

In 2015, ‘The Entrepreneurship Ecosystem Index’ was conceived to assess the robustness of the entrepreneurial ecosystem in Romania, in the paper “The Romanian Entrepreneurial Ecosystem. An Exploratory Study”. After 5 years, a new analysis has been conducted in order to assess the entrepreneurial ecosystem situation, see how it has changed since 2015, and formulate recommendations.

Compared with 2015, the development of the entrepreneurial ecosystem increased by 30%, from 4.5 to 5.8 in 2020, on a scale of 1 to 10, and it is evidence of an increase in the development and robustness of the ecosystem. 

The maturity of the entrepreneurial ecosystem is apparent in the tendency of detachment from a model where the entrepreneur is acting independently within the ecosystem towards a model where the entrepreneur often finds him/herself in a network, with various resources and communities:

Figure 2 Romanian Entrepreneurship Index

1) Today, entrepreneurs are inspired by success stories more than family and friends,

2) Financial programmes for start-ups have increased in number, comparative to the family and personal financial support, that is available,

3) More and more consultancy advice is being accepted,

4) More financial and non-financial support programmes are developing and

5) The investments in other entrepreneurial activities have increased.

Compared to 2015, the inspiration sources for becoming an entrepreneur are more diversified: sources other than family and friends inspire entrepreneurship, among which the most frequent are previous work experience in other organizations (23%) and other entrepreneurs (18%). There are some differences in the diversification of the financial sources to start a business as well, much more in the sense that bank loans and grants are used along with personal or family savings. More, many new entrepreneurs ask for consultancy and they are willing to invest, and these add value to the present ecosystem.

The Innovative Entrepreneurship Spectrum

For advancing the understanding of the entrepreneurial ecosystem and its innovativeness and sustainability, The Innovative Entrepreneurship Spectrum (henceforth, IES) has been designed. This spectrum is a useful tool as it can convey information that would be difficult to convey with words alone. These types of representations encourage haptic and visual thinking which support the design of policy thinking and communication of the vision for bringing change into the entrepreneurial ecosystem.

Figure 9 The Innovative Entrepreneurial Ecosystem in the current perspective

This spectrum classifies entrepreneurial ecosystems based on the issues of sustainability and innovation. Entrepreneurial ecosystem is seen through the performance of the 6 pillars: policy, support, human capital, culture, finance and markets.

It is relevant if the entrepreneurial ecosystem is placed on the axes of sustainability and innovation and it is less relevant for the overall picture which pillar is on the sustainability and which on the innovation axis. That is because each ecosystem has its own specificities.

It is recommended to use this tool to 1) monitor the entrepreneurial innovation ecosystem, 2) evaluate measures and programs to support (innovative) entrepreneurship and 3) to assess the degree of sustainability and innovation of a business.

The analysis of publicly available data and the results of the survey (own survey, 2020) shows that public policies and financial support mechanisms for entrepreneurship are oriented towards stagnation rather than innovation and do not provide ecosystem sustainability.

For example, in the representation of the ecosystem in terms of the above spectrum it is observed that human capital and public policies are on the axis of unsustainability. That is due to the exodus of skilled labour and to the governmental support for increasing the number of start-ups based exclusively on a business plan. This explains why Romania continues its downward trend in innovation.

It is recommended to take measures to increase the sustainability of human capital and public policies based on evidence, while targeting financial support mechanisms towards innovation and not just entrepreneurship. At the same time, measures are recommended to encourage collaboration with the diaspora in entrepreneurship, research and innovation.