The Evolution of Entrepreneurship in Technological Ecosystems

Entrepreneurship is undergoing significant changes as the business world shifts into Industry 5.0 and the growing influence of technological ecosystems. This evolution is driven by global trends, pushing enterprises to innovate and integrate new technologies to stay competitive. The modern entrepreneurial environment thrives on innovation, systems thinking, and the adoption of digital tools that allow businesses to respond effectively to market demands and consumer preferences.

In a new book co-authored with Ananya Rajagopal (Universidad Anáhuac), Unmasking Invisible Challenges in Entrepreneurship (Springer, 2024), we discuss five critical game changer models linking local area transfer of technology to revamp innovation for social entrepreneurship for growth and acceleration, social ubiquity, and global accessibility of markets to entrepreneurship in a digital interface. The book introduces these transformative models and highlights their important role in entrepreneurial development, serving as a crucial part of social and economic progress within today’s innovation and technology ecosystems.

This article, which focuses on the first chapter of the book, explores the genesis of this evolution in the context of changing global trends within industry 5.0 and technology ecosystem.

From Traditional to Technologically Driven Ventures

Historically, entrepreneurship has been linked to family-run businesses with a local or community focus. However, today’s entrepreneurial landscape has transitioned into a more commercialized and technologically intensive approach. Start-ups often begin locally but expand globally through digital platforms. This shift emphasizes the need for continuous learning and adaptation through research and development (R&D), allowing entrepreneurs to identify new markets, create innovative products, and generate employment. The capacity to expand their reach and enhance efficiency depend on their ability to harness information and communication technologies, allowing them to manage operations across distances and maintain competitive advantages.

A key aspect of this is the development of frugal innovations—affordable, practical solutions that meet latent consumer needs and disrupt traditional market relationships. Such innovations help businesses carve out unique market niches. For smaller enterprises, aligning with social values and creating local impact is crucial, often leading to the formation of collaborative efforts, such as entrepreneurial guilds or consortiums, to share resources, mitigate risk, and boost returns.

The Role of Innovation and Technology in Modern Entrepreneurship

Innovation, particularly in fields like artificial intelligence (AI) and machine learning (ML), is reshaping the entrepreneurial landscape. By leveraging these technologies, businesses can create products that meet long-term consumer needs, fostering sustained market demand. However, launching new products presents challenges, especially for transitional enterprises, as each innovation requires a unique market-entry strategy. While innovation is crucial for competitive advantage, market success also depends on understanding consumer preferences, brand loyalty, and the perceived value of products.

In competitive industries, innovation plays a key role in determining a firm’s success. Many modern firms diversify their products and invest heavily in R&D to ensure they fit market demands. However, despite their innovative capabilities, smaller enterprises often face difficulties in protecting intellectual property, as larger firms may acquire and adapt these innovations without formal agreements. This can limit the ability of small businesses to fully capitalize on their innovations, which is a significant challenge in the entrepreneurial ecosystem.

Industry 5.0: A Fusion of Human and Machine Intelligence

Industry 5.0 marks a new era in the industrial revolution, where the emphasis is on blending human expertise with AI and ML to optimize business processes. This is a step beyond Industry 4.0, which focused on automation and digitization. In Industry 5.0, businesses aim to offer more personalized, demand-driven solutions by combining human creativity and decision-making skills with the precision of AI.

The integration of AI, robotics, and augmented reality (AR) is transforming how businesses operate. Tools like collaborative robotics, exoskeletons, and virtual reality (VR) enable deeper interaction between humans and machines, driving the future of manufacturing, operations, and marketing. Companies like Airbnb, Uber, and Amazon have embraced digital platforms to enhance customer relationships and streamline their operations, setting an example for businesses navigating the transition to Industry 5.0.

For micro, small, and medium enterprises (MSME), the accessibility of AI, ML, and large language models (LLMs) has opened new opportunities in product design, supply chain management, marketing, and customer relations. The challenge now lies in integrating traditional value chains with these advanced technologies to develop new business models that can compete in this rapidly evolving ecosystem. Industry 5.0 is not only transforming how businesses operate but also making cutting-edge technology more accessible, setting the stage for an era of unprecedented innovation and growth.

The Role of Industry 5.0 in MSME Evolution

Micro, small, and medium enterprises (MSMEs) are adapting to Industry 5.0, where ICT and advanced digital tools are reshaping business practices. Public policies and entrepreneurial guilds are helping MSMEs in developing economies bridge the technological gap, though adoption is still limited.

Many MSMEs, rooted in family businesses, struggle with resistance to change, gender inclusivity, and balancing work-life dynamics. Industry 5.0 offers solutions through sustainable manufacturing and agile supply chains. However, MSMEs face challenges like resource limitations, leading to inefficiencies and risk when expanding operations. Industry 5.0 technologies can help improve productivity, lower costs, and create more efficient supply chains. Yet, innovation remains slow, with many businesses relying on low-cost, niche strategies. However, tools like AI, ML, and AR enable MSMEs to expand their reach, adopt flexible business models, and align with global markets.

A human-centric approach to Industry 5.0 aims to balance technology with environmental, social, and governance (ESG) principles. This evolution can empower MSMEs to enhance efficiency, boost competitiveness, and contribute to socio-economic development. Ultimately, Industry 5.0 offers a pathway for MSMEs to innovate, grow, and create sustainable business models for the future.

Consortium Strategy and Industry 5.0

Consortium entrepreneurship has become a powerful force in shaping the modern market, enabling businesses to streamline supply chains and marketing strategies by working together under a shared economy model. This approach integrates capital, technology, and managerial expertise to meet strategic goals. With technological advancements, the significance of human and knowledge capital in driving entrepreneurial success has become increasingly evident. The fusion of these factors—innovation, systems thinking, and technology—plays a pivotal role in the development of new business ideas and models, ultimately determining the success of entrepreneurs in a competitive global marketplace.

In developing economies, consortium strategies link local small and medium enterprises (SMEs) with multinational corporations (MNCs), improving productivity and global presence. With the rise of Industry 5.0, these partnerships blend cost-effective manufacturing with innovation, facilitated by technologies such as AI, machine learning (ML), and human-centric design. MNCs often provide resources, enhancing SMEs' capabilities and global reach through hybrid competitive strategies.

Key Challenges for SME’s

Despite the opportunities, SMEs face challenges in digital transformation, including resistance to change and leadership barriers. However, MNCs like Microsoft offer training and gradual transition strategies, helping local businesses overcome these hurdles. The platform economy and consumer-centric marketing further strengthen global-local alliances, driving new business models and customer engagement. Some success factors are:

1. Innovation Networks: Knowledge sharing and collaboration enhance SMEs’ innovation capacity.
2. Symbiosis in Manufacturing: Combining local expertise with global technology leads to cost-effective products.
3. Human-Centric Approach: Industry 5.0 integrates AI with human skills, prioritizing sustainability and social value alongside economic growth.

These factors help local enterprises adapt to global competition, strengthening both SMEs and MNCs through technology-driven partnerships. Industry 5.0 empowers local firms to innovate and thrive in a digital and competitive global market.

Entrepreneurial Domains: Navigating the Ecosystem for Sustainable Growth

Entrepreneurship flourishes within a complex ecosystem influenced by social, economic, and business factors. MSMEs are pivotal in job creation and economic growth, serving as key social value providers that align with community needs and cultural values. However, assessing their long-term impact on the economy, environment, and quality of life presents challenges, as local enterprises navigate market trends while striving for economic self-sufficiency.

Family businesses, essential to local economies, face difficulties in staying relevant amidst changing market dynamics. Many struggle with outdated management practices, and the decline of multi-generational involvement often weakens their operational continuity. To address these challenges, public policies and community initiatives are vital, providing support for skill development and aligning business models with market demands. Such strategies can enhance the capacity of family enterprises, allowing them to adapt and thrive in competitive environments.

Disruptive marketing practices, networking, and entrepreneurial education are crucial for entrepreneurial success. Government support through effective public policies can foster innovation and technological adoption, helping small enterprises gain a competitive edge.

As the pace of technological change accelerates, MSMEs must embrace strategic renewal and co-evolve with market players to unlock their potential. Initiatives focusing on frugal innovation and participatory business models will further empower small enterprises, creating a sustainable entrepreneurial landscape that promotes growth and adaptability.


El autor es profesor del Departamento de Marketing e Inteligencia de Negocios, EGADE Business School.