Academic journal article Journal of Competitiveness Studies

Entrepreneurial Ecosystems as a Pathway towards Competitiveness: The Case of Puerto Rico

Academic journal article Journal of Competitiveness Studies

Entrepreneurial Ecosystems as a Pathway towards Competitiveness: The Case of Puerto Rico

Article excerpt

INTRODUCTION

Many things have changed in the global scenario since Levitt's (1983) proposition that the economy has been reshaped into a global one. For instance, day-to-day discussions regarding competitiveness and entrepreneurship have become the focal point in the agenda of policy makers, NGOs and business Finns. In the matter of competitiveness, the contemporary vision encompasses two schools of thought: (a) those who argue that competitiveness is defined by key input factors of the Firm, and (b) those who contend that macroeconomic aspects like public policy, infrastructure and economic growth constitute the key pillars of this concept (Agnihotri & Santhanam, 2003; Scott & Lodge 1985). With regard to SME development and entrepreneurship, policy focused on enhancing competition, job creation and economic development in the former case, while in the latter public policy concentrated on creativity, innovation and economic growth (Storey & Stevenson, 2005). Extant literature shows a convergence between competitiveness and entrepreneurship. That is, for a nation to be competitive and possess a strong entrepreneurial culture there must be a public policy that capitalizes on both; the pillars of competitiveness and the formation of an entrepreneurial ecosystem.

After embarking in a self-inflicted recession in 2006, the economy of Puerto Rico showed signs of recuperation from 2009 to 2012. During that period, the government took advantage of the US fiscal rescue package and combined it with a fiscal conservatism policy. However fiscal policies implemented since 2013 plunged the economy into a deep stagflation. The island has lost attractiveness in 6 of the 10 key pillars of the Doing Business Report (Word Bank, 2014), while the Competitiveness Report (WEF, 2013) shows that the island is still losing ground before economies like Chile, Colombia and Mexico.

This paper is built around three basic premises. First, Puerto Rico's centrally planned economy is to blame for its current situation, for the grim future ahead and for the lack of a clear cut policy toward the development of a strong entrepreneurial class on the island. The government's role as key player in the island's economy causes a disruption amongst the elements of the ecosystem, thus preventing them from working as such. Second, governmental intervention in entrepreneurial activity hinders the development of an entrepreneurial ecosystem by disrupting the interaction between its core elements. Third, in spite of the diversity of initiatives to develop an entrepreneurial culture, there has been no connectivity between the components of the ecosystem as a whole. Finally, the author proposes an alternate model for the development of an entrepreneurial ecosystem as part of the economic development model for the Puerto Rican economy.

LITERATURE REVIEW

The one thing that the concepts of competitiveness and entrepreneurship have in common is the diversity in points of view and definitions proposed by researchers, scholars, supporting organizations and government officials to describe each one of them. As the definitions for both concepts abound and are contentious, so too are the economic policies to foster each sector.

Extant literature examines not only the existence, but the quality and impact of such policies. Porter (1990) argues that government policies strengthen the synergy between the components of his "Diamond of National Competitiveness" by creating an environment in which companies compete without the direct intervention of the government. By the same token, Badrinath (2004) argues that the nation's competitiveness depends on the government's pro-activeness to develop alliances with organizations that provide assistance and support to the business community, the firm's ability to improve its productivity and efficiency through innovation and technology diffusion (Hamel & Prahalad,1989) and the interconnectedness of industries that foster the flow of information, ideas and innovations for the mutual benefit of those engaged in the network (Porter, 1990). …

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