Making Sense of Economic Ecosystems

Barbara Baarsma, PwC's Chief Economist, indicates the importance of economic ecosystems: “Lagging labour productivity growth hampers structural economic capacity, already constrained by labour shortages, overburdened electrical grids and limited space. Yet, we need productivity growth to afford rising healthcare costs, increased defence spending and higher climate mitigation and adaptation costs. Economic ecosystems are powerful engines that supercharge productivity growth—much like a orchestra, where each instrument plays in harmony, amplifying the overall performance far beyond what any soloist could achieve alone.” 

We show the value of four types of economic ecosystems—entrepreneurial, knowledge, innovation and business ecosystems.

Entrepreneurial ecosystems: fostering entrepreneurship in a region

Entrepreneurial ecosystems provide the necessary conditions for entrepreneurship to thrive. Our analysis shows that regions with more developed entrepreneurial ecosystems, such as Greater Amsterdam and Southeast North Brabant, also have higher labour productivity (see Figure).

Figure: Dutch regions with more developed entrepreneurial ecosystems have higher labour productivity

Knowledge ecosystems: generating knowledge

Knowledge ecosystems focus on the generation of new knowledge through joint research work, collaboration, or the development of a knowledge base. Universities, research institutes and innovators play a central role in these ecosystems, with large firms with established R&D departments, SMEs and start-ups also contributing.

Innovation ecosystems: creating products and improving processes

Innovation ecosystems integrate the exploration of new knowledge and its exploitation for value co-creation to develop new products and improve processes. The importance of such innovation ecosystems cannot be overstated: between 1996 and 2022, the Netherlands has experienced a strong increase in the absolute number of collaborative innovators amongst companies.

Business ecosystems: creating, delivering and capturing value

Business ecosystems are centred around the creation, delivery and capture of value. Value can mean driving growth, generating more sales, reinventing business models, or even in another non-monetary form. Business ecosystems can be organised around a company, platform, technology, geographical area, industry, individual entrepreneurs or specific goals.

Table: Summary of the four economic ecosystems

Baarsma: “Our analysis identifies four strategic policy priorities to strengthen economic ecosystems and drive sustainable productivity growth: The first is to promote cross-ecosystem collaboration to unlock synergies and accelerate innovation. Second, invest in regional ecosystem development to build resilient, place-based economic capacity. Moreover, it is important to support ecosystem anchors and connectors—such as leading firms, institutions, and intermediaries—to enhance coordination and scale. Lastly, modernise existing ecosystems and design future-proof ones to adapt to technological, environmental and societal shifts.”

Foster cross-ecosystem collaboration 

The different types of economic ecosystems are interdependent and flourish by collaborating, which drives productivity growth. To enable cross-ecosystem collaboration, competition authorities must strike a balance between cooperation and competition.

Invest in regional ecosystem development 

It is vital that ecosystem policies are tailored to the specific strengths and needs of regions, recognising that productivity is dependent on regional competitive advantages and bringing together the right economic activities that reinforce each other. By investing in critical local infrastructure, talent development, and support networks, regions can create environments where businesses and entrepreneurs thrive, leading to more efficient, dynamic and innovative economic activity.

Support ecosystem anchors and connectors

Anchor organisations, such as universities, and large and innovative companies, and connectors, think of incubators, accelerators and public-private partnerships, coordinate efforts, reduce transaction costs and amplify the impact of individual participants within ecosystems, leading to economies of scale and scope. Policymakers should strengthen the role of organisations that foster innovative collaboration by giving more opportunities for different parties to interact with each other, participate in common projects and share access to resources.

Remake existing and develop new ecosystems to be future-proof

To be future-proof, ecosystems must use scarce production resources efficiently. Policymakers should thus incentivise companies to internalise the costs to society caused by externalities, such as pollution or high water use. Ecosystems and their participants, heavily reliant on scarce resources, should consider restructuring their business models.

When asked what businesses can learn from the findings on economic ecosystems, Veronique Roos-Emonds, member of the board of PwC Netherlands, answers: “There are three business takeaways. Start by defining your ecosystem strategy and deciding on your desirable level of involvement. Also, businesses should build strong partnerships and engage with policymakers when shaping the ecosystem environment. Finally, in business ecosystems, companies should explore new business models and learn from others.”  

Define an economic ecosystem strategy and decide on your desirable level of involvement. 

This provides a guiding framework for engagement in ecosystems and helps prioritise resources. It also calls for an agile operating model, with a culture of trust, collaboration and experimentation both internally and externally.

Forge partnerships and consult policymakers 

Businesses should leverage ecosystems to build and enhance partnerships, moving beyond transactional relationships to strategic collaborations with suppliers, customers, research institutions, government agencies and competitors. Policymakers can highlight priority areas and those with potential benefits from ecosystem development.

In business ecosystems, companies should explore new business models and learn from others 

Continuous business model reinvention is becoming more important, as 42 procent  PwC's 28th CEO Survey. Analysing potential partners and engaging with various industries and ecosystems can uncover growth opportunities and broaden horizons. Additionally, when considering business model reinvention, ecosystems and their participants should restructure their operations to future-proof activities.

“Companies must recognise that their strategic position is no longer defined solely by the industry they belong to”, Baarsma concludes. “Instead, they need to adopt a broader perspective—taking into account their roles across value chains as suppliers, producers, or buyers; their place within dynamic ecosystems; and the evolving preferences of their customers. In short, it’s time to move from a static view of strategy to one shaped by value in motion.”