Entrepreneurial ecosystem of Luxembourg: Empirical insights into barriers and stimuli based on GEI data

Abstract

Objective: The research objective of this article is to evaluate Luxembourg’s entrepreneurship position and performance, and compare its entrepreneurship profile with other countries, and then to investigate the main bottleneck that holds back Luxembourg’s growth in terms of entrepreneurship. Research Design & Methods: The Global Entrepreneurship Index (GEI) approach was employed in this research. This methodology focuses on institutional and individual dimensions of entrepreneurship that are linked to efficiency. Furthermore, we used a unique feature of the GEI, the Penalty for Bottleneck (PFB) methodology, to infer which entrepreneurial elements should be tackled and how much effort is needed to alleviate the bottleneck of the Luxembourg entrepreneurial profile. Findings: The study results show no improvement in Luxembourg’s profile in terms of entrepreneurship from 2014 to 2016, although it has a very high GDP per capita than those with GEI higher than it. The “start-up skills” were the main bottleneck in terms of entrepreneurship performance, which lowers the overall GEI score of Luxembourg. Therefore, the start-up skills should be improved 100% to become 0.23 in order to enhance Luxembourg’s GEI score by 10 points; consequently, the new overall GEI becomes 68.3. Implications & Recommendations: To increase and develop entrepreneurship programs in Luxembourg, the responsible authorities in Luxembourg must adapt entrepreneurship programs that target various groups of society, especially with many immigrants. It should also facilitate access to entrepreneurial and support programs to enable aspiring entrepreneurs to create their businesses. Luxembourg should also focus on refugees by strengthening the entrepreneurial programs available to them and cooperating with NGOs to overcome obstacles such as the language barrier. Contribution & Value Added: This paper highlights Luxembourg’s vulnerable performance using a new approach that combines single and institutional variables in a unique model. Additionally, what sets this research apart is the use of PFB, which is also used to uncover the components of entrepreneurship that need to be addressed.

Keywords

• entrepreneurship
• entrepreneurial ecosystem
• bottleneck’s penalty
• gei
• gem
• luxembourg