No. 37




Implementation of the Business Ecosystem Concept in the Estonian Context *

04 June 2018


RiTo No. 37, 2018

  • Merli Reidolf

    Merli Reidolf

    Research Scientist, School of Business and Governance, Tallinn University of Technology

  • Aleksandr Michelson

    Aleksandr Michelson

    Economy Analyst, PRAXIS Centre of Policy Studies

  • Helena Rozeik

    Entrepreneurship Cooperation Coordinator, Project Manager, Tallinn University of Technology

  • Merle Küttim

    Merle Küttim

    Research Scientist, School of Business and Governance, Tallinn University of Technology

  • Marianne Kallaste

    Lecturer, School of Business and Governance, Tallinn University of Technology

Using of the business ecosystem concept has grown drastically during the last five years. This concept describes the interaction between companies mutually and with other key actors of business on the basis of central attraction. Different approaches to business ecosystem focus on the creation of new companies and establishing suitable environment for them. The best-known example of business ecosystems is Silicon Valley (USA).

The purpose of this study was the creation of preconditions for the implementation of the business ecosystem concept in Estonia, and putting together the picture that would describe the Estonian business ecosystem and could be used as a basis for drafting development perspectives relating to productivity. Proceeding from theoretical literature, a hypothesis was presented in the study that Estonia is one business ecosystem, mainly due to Estonia’s smallness and the high concentration of economic activity around Tallinn. As the scope of the study was limited, it was not possible to prove that hypothesis, or to overturn it. However, the analysis performed in the study showed that at present, we can speak of sub-ecosystems, or economic communities that have certain characteristics of a business ecosystem. Because of that, the study focused on communities that connect companies and can be defined by economic sectors. They were analysed on the basis of the theoretical starting points of a business ecosystem.

Four economic communities were analysed in the study: community of small boat construction, community of biotechnology, community of food product producers and community of log house producers. The economic communities were analysed on the basis of the cohesion rate of communities and the share of R&D in the development of product/service. Proceeding from the business ecosystem concept, it may be expected that the communities which are based on research and better cohesion as a community have higher productivity. In the case of coherent communities, there is greater probability that the success of some of its members will also contribute to the growth of general entrepreneurship activity. As a result of the study, it can be said that human capital, R&D activities and markets have the greatest impact on productivity. Estonia’s smallness, openness and orientation on export makes business ecosystems sensitive also to changes taking place outside Estonia, and the growth of cohesion with actors outside Estonia will probably continue. At the same time the price levels in Estonia, including labour expenses, are rapidly approaching the prices of our trade partners, and if no investments are made to improve competitiveness in the nearest future, there is a great threat that our advantages will disappear.

* Peer-reviewed article.