Developing an Assessment Model for Entrepreneurship Ecosystems Using Hierarchical Decision Model: Case Study of Riyadh City

Abstract

Entrepreneurship is one of the major drivers of economies. Countries that aim to improve their economies by increasing entrepreneurial activities and its effectiveness, need to develop an effective entrepreneurship ecosystem. This ecosystem combines a set of domains and factors that create a healthy environment for entrepreneurs. The literature review analysis indicates that the study of entrepreneurship ecosystems at early stages, yet it is one of the emerging topics within the last decade. The analysis shows that there is limited research about structured assessment methods to evaluate the entrepreneurship ecosystems. Therefore, this research objective is to introduce a universal assessment model that can be adopted in different cities for implementing an effective entrepreneurial ecosystem. This will be achieved by addressing three main research questions. 1) What are the main factors influencing the entrepreneurship ecosystems? 2) What are the weights of the factors influencing the implementation of an effective ecosystem? 3) Does the introduced method provide a practical process to evaluate entrepreneurial ecosystems in different regions? The research methodology to address these questions is the Hierarchical Decision Model (HDM). The structure of this methodology includes four different levels: Objective, perspectives, criteria, and alternatives (El-Wahed & Al-Hindi, 1998). It was developed from the Analytic Hierarchical Process (AHP), which is a process that relies on pairwise comparisons conducted by a panel of experts. The main factors of the entrepreneurial ecosystems were identified based on literature review and experts' interviews. These factors were formulated as perspectives and criteria of the Hierarchical Decision Model, which was validated by subject matter experts. Then, the model was quantified by other subject matter experts to identify relative weights for all of these perspectives and criteria. These criteria were measured by developing desirability curves metrics, which were scored by experts. This research identified and ranked five main perspectives respectively as follows: market, human capital, finance, culture & support, and policy. Twenty different criteria were identified and ranked under these perspectives. Finally, a case study was conducted to demonstrate the practicality of this assessment model. The model pointed to the weakness and strengths of Riyadh's entrepreneurial ecosystem along with providing recommendations for areas of improvement based on desirability curves.