Evaluation and Analysis of the Cultural and Social Environment of the Entrepreneurial Ecosystem Using the PFB Approach

Abstract :

This study empirically analyzes the cultural and social environment as a pillar of the entrepreneurial ecosystem and its impact on business performance and entrepreneurship development in Iran. Using data from the Global Entrepreneurship Monitor (GEM) for 2019–2020, the research applies the Penalty for Bottleneck (PFB) methodology, grounded in the weakest-link theory and the theory of constraints. The cultural and social environment is operationalized through two sub-indices: Perceived Entrepreneurship (PE) and Social Values of Entrepreneurship (SE), comprising ten pillars. The main objective is to identify bottlenecks, measure penalties imposed on stronger pillars, and prioritize policy interventions. The findings reveal that the “ease of starting a business” pillar (normalized value = 0.35) acts as the bottleneck. It imposes the largest penalties on “high social status of entrepreneurs” (−0.15), “media attention to entrepreneurship” (−0.08), and “perception of entrepreneurial capabilities” (−0.08). The PE sub-index decreases from 53% to 50%, the SE sub-index from 71% to 65%, and the overall Cultural Environment Index (BEI) from 62% to 58% after applying PFB. However, ecosystem efficiency (ABE) improves from 56.24% to 61.96% after penalty application, indicating that addressing the bottleneck enhances balance. The study concludes that entrepreneurship policies should target the weakest pillars rather than reinforcing stronger ones. The findings offer a systemic framework for improving Iran’s entrepreneurial cultural ecosystem and reducing policy intervention costss

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