Impact and policy supporting Thailand innovation driven enterprise: orchestrating university innovation and entrepreneurship ecosystem with public and private stakeholders

Abstract

This research paper aims to investigate the impediments faced by innovation-driven enterprises in Thailand and to explore the current measures, policies, and mechanisms related to innovation-driven enterprises (IDEs)’ development both domestically and internationally. The study encompasses a comprehensive approach, including an analysis of an innovation entrepreneur database comprising 320 investors and 883 IDEs. Moreover, semi-structure in-depth interviews were conducted with three investors, twenty-two IDEs’ founders, eight executives, and experts from various sectors, including government, university incubators, and the private sector in Thailand. Through this multifaceted investigation, this paper sheds light on the key factors that hinder the success of IDEs in Thailand, which primarily revolve around the quality of entrepreneurs (Team), Product and Market Fit, and Support. These factors collectively impact the depth of knowledge, business incubation, acceleration programs, and the effectiveness of laws, measures, and policies in supporting innovation capability development within IDEs. In addition, this paper presents a framework for Thailand’s IDEs hub, facilitating the connection between the university's innovation and entrepreneurship ecosystem with public and private stakeholders. This framework serves as a mechanism to address the identified hindrances and foster a conducive environment for IDEs development. To address the obstacles, this paper proposes three crucial strategies, namely, (1) talent management, (2) ease of doing scaleup, and (3) availability of funding. These strategies are envisioned to counteract the identified challenges and can be effectively implemented through an operating model and practical working procedures tailored to suit the specific context of Thailand.

Introduction

In the context of global economic, health, and social uncertainties, there is a growing consensus on the pivotal importance of innovation. Both developed and developing nations are increasingly prioritizing innovation to ensure sustainable, long-term productivity growth. This focus on innovation is not only driven by the need for economic resilience but also by its role in enhancing national competitiveness and facilitating job creation (Ali et al., 2021; OECD, 2013; Zsuzsanna & Herman, 2012). Amidst this emphasis on innovation, understanding the requirements and factors influencing innovation processes becomes imperative. In addition, recognizing what it takes to establish an innovation-driven enterprise (IDE) is crucial. This includes a comprehensive understanding of the ecosystem where IDEs operate, their role in economic growth, and their contribution to job creation and community enrichment (Onside, 2021; Santisteban & Mauricio, 2017). Especially notable in countries characterized as innovation leaders, such as those in North-Western Europe, is the high quality of innovation systems that surpass GDP per capita levels. Within this framework, economic development is intricately linked to the innovation and capacity for innovation within enterprises (Zsuzsanna & Herman, 2012). However, it remains essential to elucidate the role of policies and measures in supporting IDEs within the broader entrepreneurship context. This clarification is necessary to bridge the understanding of how these initiatives contribute to fostering a conducive environment for IDEs, aligning with national innovation goals and supporting entrepreneurial endeavors. Recent research emphasizes that the connection between entrepreneurship and economic growth extends beyond the sheer quantity of new firm entries. Instead, it is intricately linked to a specific subset of high-growth startups, commonly identified as innovation-driven enterprises (IDEs) (Botelho et al., 2021). This assertion gains further support from the hypothesis proposed in the Global Entrepreneurship Monitor (GEM), indicating that IDEs play a significant role in shaping market dynamics, fostering economic growth, and giving rise to new entities (Choi et al., 2021; Godany et al., 2021).

In alignment with this notion, Thailand, too, endeavors to propel the nation towards the envisioned “Thailand 4.0” paradigm, necessitating reform within the research and innovation ecosystem to bolster economic competitiveness and societal development, thereby elevating the quality of life for its citizens (Jones & Pimdee, 2017). The successful cultivation of IDEs calls for a comprehensive overhaul of regulations and laws, along with the formulation of measures and incentives, including government services, designed to facilitate entrepreneurial innovation. Amendments to existing laws and regulations are warranted to remove barriers and create a conducive environment for innovative business operations (Bell et al., 2019; Bianchi & Giorcelli, 2018; OECD, 2018; Pian & Steinwender, 2019). Furthermore, the establishment of an investment ecosystem equipped with sufficient funding sources plays a pivotal role in supporting IDEs throughout their developmental journey. This ecosystem facilitates the development of products and services for the market, enhances business value at each stage of growth, and fosters expansion into global markets. Despite boasting over 2000 startups as of 2021 (TRACXN, 2021), Thailand faces a challenging task in realizing the vision of Thailand 4.0, spearheaded by IDEs, by 2027. As a response, the government has set ambitious targets, including raising overall R&D investment (Gross Domestic Expenditure on R&D: GERD) to 2% of GDP, fostering the growth of 1000 IDEs with sales of 1000 million baht, and achieving five unicorn-level IDEs within the country. However, it is evident that the development of Thailand’s venture capital ecosystem demands attention at both the policy and operational levels. There is a dearth of empirical data and data analysis concerning the demand and supply aspects, such as the potential number of IDEs, the types of investors and their potential, the range of investment opportunities, and technologies or industries with high investment potential (Thawesaengskulthai et al., 2020, 2021).

This study systematically investigates the advancement of IDEs development in Thailand through a comprehensive examination comprising five distinct dimensions: (1) evaluation of Thailand's investment ecosystem; (2) identification of impediments to IDEs development in Thailand; (3) formulation of an IDEs investment ecosystem support mechanism; and (4) analysis of measures and mechanisms supporting IDEs in both Thailand and foreign countries. The outcomes and analyses derived from these inquiries aim to establish the foundation for the formulation of policy recommendations and the development of an operational model. These outcomes hold the potential to serve as a guiding framework for the cultivation of innovation-based entrepreneurial ventures, specifically tailored to the unique contextual intricacies of Thailand.

Literature review

Revolution of innovation system in Thailand

The national innovation system (NIS) is a dynamic framework encompassing interactive institutions, private and public firms, universities, and government agencies within a nation, aimed at producing, disseminating, and leveraging knowledge within its borders. Such interactions occur through diverse mechanisms, including market-driven and non-market collaborative arrangements, as well as financial policies (Wonglimpiyarat, 2018).

In Thailand, the NIS is designed to bolster the innovation endeavors of eligible private companies engaged in research and development, striving to manifest technological innovation in their products and processes. Notably, public institutions, including prominent government agencies and research institutes, play an integral role in supporting these companies’ innovation efforts (Parkey, 2012). Over the decades, Thailand has made significant strides in enhancing its national innovation capabilities through policy initiatives in various domains, such as research and development, education, and industry (United Nations, 2015). The Asian economic crisis in 1997 further catalyzed science, technology, and innovation policy reform, exemplified by the establishment of Software Park Thailand in 1999, a government-sponsored agency aiming to bolster the sustainability of the Thai software industry amidst a rapidly changing global digital economy (Habaradas, 2008). Despite these efforts, numerous challenges persist, hindering entrepreneurship and innovation, leading to an underdeveloped innovation system in Thailand (Schwab et al., 2012). The Thai innovation system exhibits strengths in various aspects, including awareness, entrepreneurialism, focused industries, restructuring of partial institutions, technical institutes, the semi-autonomy of the National Science and Technology Development Agency (NSTDA), education reform and skill development funding, and a national science and technology committee (Munkongsujarit, 2016). However, weaknesses such as bureaucratic constraints in public institutions, rationale of public investment, economic fragmentation, lack of dialogue with the private sector, weak incentives, and limited progress towards university autonomy still impede the development of the innovation system.

In the early 2000s, the government aimed to enhance Thailand’s international competitiveness by bolstering export, foreign direct investment, and tourism, while also investing in domestic and grassroots economies. The adoption of the concept of an innovation system and the recognition of innovative capabilities as critical factors for increasing and sustaining international competitiveness gained prominence during this period (Intarakumnerd, 2005). The 10-year Science and Technology Strategic Plan (2004–2013) prioritized the notion of a national innovation system and industrial clusters, emphasizing measures to encourage innovation and strengthen the innovation system, such as tax incentives and soft loans for R&D investments, establishing excellence centers for postgraduate research students, and initiatives to strengthen grassroots economies (Chaminade, et al., 2012; NSTDA, 2004).

Overall, the evolution of Thailand’s innovation policy and the strategic emphasis on nurturing innovative capabilities demonstrate the country’s dedication to enhancing its innovation ecosystem and positioning itself on the global stage. Despite incremental progress in the innovation system, many instruments in Thailand still adhere to the traditional paradigm, primarily emphasizing research incentives and public sector focus, rather than fostering capability building and innovation within firms (Intarakumnerd, 2005). Many literatures have highlighted the weaknesses of Thailand's innovation system, often pointing to the underdeveloped relationship between firms and universities, leading to limited intra-firm technological capabilities and constrained innovation–center interactions arising from this linkage (Intarakumnerd, 2006; Rakthai et al., 2019). Strengthening collaboration within the triple helix model involving government, industry, and academia has the potential to both attract a broader pool of talented individuals and cultivate a more proficient cadre of skilled workers and researchers. This, in turn, contributes to increased knowledge and technological outputs, fostering a more successful and competitive economy (Villegas-Mateos, 2023). In response, various initiatives have been introduced to bridge the gap between the university, private, and public sectors, while enhancing innovation capabilities. Noteworthy establishments to address this concern include the Thailand Science Park in 2002, the National Innovation Agency (NIA) in 2003, and the University Business Incubator (UBI) in 2004 (Habaradas, 2008). These organizations have been envisioned to alleviate the mentioned pain points and drive the collaborative advancement of innovation in Thailand. While the UBI mechanism aimed to promote university–industry linkages, the commercialization of university intellectual properties (IPs) through licensing/technology transfer offices yielded limited success. Only six out of 140 patents were transferred to the industry during the period of 1995–2004 (Krisnachinda, 2009; Wonglimpiyarat, 2016). To foster R&D collaboration and commercialization, Thailand has introduced the university technology commercialization model, exemplified by technology clusters like Science Park in Northern Bangkok and Technolopolis or Innovation Park in university-dense areas (Wonglimpiyarat, 2016).

The Thai government has implemented various policies and programs to promote entrepreneurship and technological development (Wonglimpiyarat, 2016). However, compared to prosperous countries in the startup ecosystem, the support provided by the government in Thailand primarily revolves around financial assistance, whereas successful countries emphasize comprehensive support, including an entrepreneurial mindset, culture, and flexible regulations (StartupBlink, 2020). For example, the U.S. has a National Advisory Council on Innovation and Entrepreneurship that aims to enhance the country's capacity as a leading startup nation and innovator (Raimondo, 2022). The U.K. encourages the internationalization of tech companies, while Israel has mature venture capital support and centralized coordination for ecosystem growth (Deloitte, 2023). In Thailand, the startup ecosystem is currently in a developmental phase, holding the 53rd position globally and the 11th position in the Asia Pacific region (StartupBlink, 2022). To improve its ranking and foster growth, it is imperative for Thailand to overcome key obstacles such as talent scarcity, limited access to capital, mentorship support, regulatory clarity, and comprehensive government backing (Deloitte, 2023).

Key elements influencing the success of startup ventures and innovation-driven enterprises

To ensure the success of innovation startups and IDEs while navigating potential obstacles, various critical factors play a significant role in shaping their growth and sustainability. Extensive literature categorizes these key factors into distinct areas that contribute to the entrepreneurship ecosystem.

Government support, encompassing policies, initiatives, tax incentives, and regulations, is pivotal in creating an environment conducive to startup success. Educational initiatives, such as entrepreneurial centers, programs, clubs, and mentorship opportunities, play a crucial role in developing essential skills and know-how. In addition, infrastructure, technology, and network support provided through science parks and collaborations between universities and the private sector are essential for fostering a supportive environment. The importance of a skilled workforce is highlighted, with measures like talent visas, startup visas, global talent visas, and skill development support contributing to talent nurturing. Financial support, including grants, funding opportunities, loans, venture funds, venture capital, angel funds, and private funds, serves as a crucial lifeline, fueling innovation. According to Wonglimpiyarat (2018), the financial mechanism within the innovation system is crucial, supporting technology and innovation development, specifically in the context of research and development (R&D), with the goal of achieving effective technology commercialization, contributing to the creation of businesses, and fostering economic growth.

Prioritizing innovation, technology, and research and development (R&D) is paramount, with investments, patent protection, and technology transfer facilitated through university partnerships to drive progress. Key business factors, such as understanding market dynamics, achieving product-market fit, and planning for scaleup and exit, are critical for sustained growth. Finally, fostering a thriving startup culture involves sharing success stories and understanding the social context, emphasizing the importance of a supportive cultural environment for encouraging innovation and risk-taking (Anitha & Veena, 2022; Audretsch, 2020; Font-Cot & Lara-Navarra, 2023; Gazel & Schwienbacher, 2021; Jeanwittayanukul, 2022; Lee & Kim, 2019; Okrah et al., 2018; Ratinho et al., 2020; Sahaf & Tahoo, 2021; Schwienbacher, 2021; Song et al., 2008; Tookham, 2021; Yadav, 2015).

These factors collectively determine the overall success of a startup venture. Table 1 provides a summary of various factors driving innovation and offering support to startups, derived from relevant literature sources.

Table 1 Literature survey of important supports/factors contributing to the success of IDEs/Startup

Research method

This paper aims to provide policy recommendations and an operational model to facilitate the advancement of IDEs in Thailand. To achieve this goal, a systematic and comprehensive research framework is employed, designed to understand, and address the complexities of Thailand's IDEs investment ecosystem. Through the integration of data from diverse sources, in-depth interviews, and rigorous analytical techniques, this framework seeks to generate valuable insights and recommendations that can foster the growth and prosperity of IDEs in Thailand. The schematic representation of the research framework is depicted in Fig. 1, comprising five distinct and sequential steps, which are elaborated as follows:

Fig. 1

Research framework

Step 1: Assessing Thailand's Investment Ecosystem: The study commenced with a meticulous examination of Thailand's investment landscape. A comprehensive data set from Crunchbase spanning 2010 to 2022 was employed, comprising data on 320 investors and 883 IDEs, with a specific focus on investment valuations. Through this data-driven approach, insights into the dynamic characteristics of Thailand's investment ecosystem were sought. Scrutinizing this data set allowed for uncovering nuanced trends and conditions, providing a foundation for informed analysis in subsequent research phases.

Step 2: Unveiling Factors Driving Thailand's IDEs Development: To comprehensively examine the determinants influencing the success of innovation-driven enterprises (IDEs) in Thailand, semi-structured, in-depth interviews were conducted to gather the necessary information. The interviews took place between March 2020 and May 2021, with each session allocated a duration of 1 h for the interviewees. Engaging 22 individuals of IDEs’ CEOs and co-Founders in Thailand, a purposive sampling method ensured diverse perspectives. An interview protocol, featuring open-ended questions, enabled participants to freely express thoughts, experiences, and attitudes. These interviews aimed to elucidate key factors fostering Thailand’s IDEs competitiveness globally. The analysis contributes vital insights into Thailand's IDEs investment ecosystem dynamics, informing strategic interventions and policy recommendations.

Step 3: Designing an IDEs Investment Ecosystem Support Mechanism: Synthesizing insights from Steps 1 and 2, expert opinion meetings were convened in the form of focus groups. Through rigorous analysis and synthesis of collected data, the goal was to design an integrated mechanism promoting harmonious collaboration between capital support systems and joint ventures in the public and private sectors. The mechanism aimed to create a cohesive framework tailored to facilitate the growth and nurturing of IDEs within Thailand's investment ecosystem context.

Step 4: Analyzing IDEs Investment Ecosystems: This step involved a comprehensive examination of Thailand's and foreign countries' investment ecosystems for IDEs. Extensive literature reviews, reports, conceptual documents, and related resources were scrutinized to understand the existing measures and mechanisms in Thailand's IDEs investment landscape, along with best practices from abroad. In addition, in-depth interviews were conducted with eight Thai executives and experts including representation from public sector (5), private sector (2), and a university incubator (1). These interviews validated and confirmed the current IDEs investment ecosystem in Thailand while capturing valuable insights from key stakeholders actively engaged in fostering innovation-based entrepreneurship within the nation.

Step 5: Formulating Policy Recommendations and Operating Model: Leveraging insights gathered from previous steps (1 to 4), a comprehensive analysis was undertaken to pinpoint gaps, challenges, emerging trends, and investment prospects within Thailand's Innovation and Development Ecosystems investment landscape. This exhaustive assessment formed the bedrock for generating robust policy recommendations and constructing an efficient operating model intended to propel the progress and maturation of IDEs within Thailand. The discernments derived from this meticulous scrutiny aimed to ameliorate existing disparities and tackle pivotal concerns, cultivating an environment conducive to nurturing and perpetuating innovation-driven entrepreneurial ventures in the nation.

Results and discussion

The current state of investment ecosystem in Thailand

In this section, a comprehensive investigation was undertaken, focusing on data derived from a survey and an analysis pertaining to the current state of Thailand's venture capital ecosystem. The data was sourced from internationally recognized databases, specifically Crunchbase.com, spanning the timeframe of 2010 to 2022. The primary objective of this inquiry was to gain valuable insights into the status and dynamics of Thailand's venture capital landscape during the specified period. Figure 2 illustrates the characteristics of IDEs in Thailand, categorized by industry. The data set used for this analysis comprises 636 IDEs in Thailand, with 317 funding records available, amounting to a total disclosed financing value of USD 2451 million. The temporal scope of the study spans from 2010 to Q1 2022, and the IDEs are classified based on their industry affiliations. Regarding the distribution of IDEs across various industry groups during the specified timeframe, the FinTech sector emerges as the most prominent, accounting for 47% of the total IDEs. Subsequently, the Logistic industry group follows with 25%, while the Fashion, AdTech, and InsurTech sectors each represent 5% and 4% of the IDEs, respectively. Nevertheless, a different perspective emerges when examining the industry groups of IDEs based on the number of companies within each category. In this context, AdTech holds the highest share with 16% of the IDEs, closely followed by FinTech with 14%. The Logistic sector accounts for 11% of the IDEs, while Tech services and e-commerce sectors contribute 9% each. The PropTech industry group, on the other hand, constitutes 7% of the total IDEs.

Fig. 2

Characteristics of IDEs in Thailand classified by industry: a fundraising value and b number of companies

This study utilizes 317 fundraising reports, representing a total of 2.451 million USD, across 636 IDEs categorized by their latest investment rounds. Notably, 48% secured seed-stage funding, while series A accounted for 21%. Corporate Venture Capital (CVC) and Venture Capital (VC) contributed 8% each (Fig. 3a). Series E fundraising showcased the highest investment value at 28%, followed by Series A and C at 16% and 15%. These insights are based on data up to Q2 2021, highlighting the significance of these investment rounds for IDEs' financial growth. Turning to financial performance, data from 262 entities shows that over 53% reported annual revenues of 1 to 10 million USD by Q2 2021. In contrast, 34% generated less than 1 million USD, and 12% fell within 10 to 50 million USD. These revenue ranges offer valuable insights into IDEs' financial stability. Examining funding rounds among 216 IDEs, over 42% experienced one round, while 13%, 6%, 4%, 1%, and 1% underwent 2 to 8 rounds (Fig. 3b), underscoring diverse funding trajectories.

Fig. 3

The funding period of IDEs classified by a number of companies and b investment value

The IDEs database reveals a noteworthy sum of 2451 million USD obtained through fundraising, primarily at the Seed Stage, spanning 2011 to Q1 2022. Analyzing 317 fundraising rounds yielded these insights. Notably, a surge in high-value fundraising events in Thailand began in 2013, peaking at a record 97 rounds in 2019. Subsequently, fundraising frequency gradually declined. Comparing fundraising value and rounds, changes in value lagged 1–2 years behind round fluctuations. Notably, significant value increments emerged from 2014, culminating at 524 million USD in 2020. When assessing IDEs' ability to progress to subsequent funding rounds in Thailand, it's evident that IDEs founded during 2010–2013 and 2015–2017 accessed deeper funding rounds and larger grants than other periods. Table 2 shows an inclusive funding overview for IDEs in Thailand, categorized by investment stages. The Angel/Grant stage (2011 to Q2 2021) secured 2 million USD in total investment, averaging 87,153 USD per investment. In the Pre-seed/Seed Stage (2011 to Q1 2022), IDEs received 143 million USD, averaging 400,000 USD per investment. For Series A (2011 to Q1 2022), total investment reached 357 million USD, averaging 3.5 million USD per investment. In Series B (2011 to Q1 2022), 298 million USD were invested, averaging 8.3 million USD per investment. Proceeding to Series C (2011 to Q1 2022), total investment was 299 million USD, averaging 42.8 million USD per investment. Series D (2011 to Q1 2022) attracted 242 million USD, averaging 80,700,000 USD per investment. For Series E (2011 to Q1 2022), total investment reached 150 million USD. Lastly, the Venture Round (2011 to Q2 2021) witnessed 143 million USD in total investment, averaging 14,295,000 USD per investment.

Table 2 Types of funding for IDEs in Thailand classified by investment period (stage) (data as of Q1 2022)

Examining Thai IDEs by industry and investment stages (2011 to Q2 2021) yields insightful findings. In the Angel/Grant Stage (35 data points), the total investment was 2.1 million USD. FoodTech led with 35%, followed by AdTech (21%) and Entertainment (13%). Moving to Pre-Seed/Seed (357 companies), the total investment reached 107.6 million USD. FinTech and Marketing Technology led at 22%, followed by AdTech (19%) and EdTech (13%). Series A (85 companies) saw 296 million USD total investment. InsureTech (19%), FinTech (14%), and E-Commerce (13%) were prominent. Series B (30 companies) garnered 201.9 million USD. Transportation/Logistics led (32%), followed by FinTech (23%) and FoodTech (13%). Series C (6 companies) secured 149.6 million USD. FinTech dominated (53%), with Fashion (35%) and Logistics (7%). Another Series B (3 companies) reached 242 million USD. Logistics led (89%), with AdTech (11%). Series E had one IDE, Flash Express, securing 150 million USD in Logistics (2021). The data collected from the database provides valuable insights into Thailand’s IDEs fundraising landscape, which accounts for a total value of 2451 million USD. When examined through the lens of industries, the IDEs can be categorized into FinTech (47%), Logistics (25%), Fashion (5%), AdTech (4%), and InsurTech (4%), respectively. Interestingly, industries considered as Thailand’s target sectors, such as BioTech, AgriTech, HealthTech, FoodTech, TravelTech, and EdTech, collectively comprise 26% of the fundraising list. However, their individual fundraising values are relatively modest, accounting for only 16% of the country's total fundraising value (137 million USD). Moreover, the investment value per transaction in these focused innovation-driven industries falls below the overall average. In contrast, industries that secure more than 80% of the fundraising are Logistics, FinTech, AdTech, and InsurTech, which are associated with high investment values. This discrepancy indicates that a significant portion of funding is yet to venture into the targeted innovation-driven sectors. Thailand’s IDE analysis unveils significant fundraising and industry patterns. Innovation-driven sectors primarily secure Series B funding, with notable engagement in preliminary rounds like Angel/Grant and Pre-Seed/Seed. Conversely, non-innovation-driven industries exhibit higher investments in later stages, notably Series B. Innovation-driven sectors show lower participation and average investment values compared to non-innovation-driven counterparts.

In Thailand's IDE ecosystem, achieving the 2% GDP IDE funding goal presents substantial challenges. Fundraising predominantly favors non-innovation-driven industries like Logistics, FinTech, AdTech, Fashion, and InsurTech. Conversely, innovation-driven sectors such as BioTech, AgriTech, HealthTech, FoodTech, TravelTech, and EdTech receive a modest 10% of the country's fundraising, consistent with Startup Universal (2020) and Techsause (2022) findings highlighting FinTech, e-commerce, and business solutions. Thailand’s limited R&D investment, only 1.14% of GDP in 2019 (The World Bank, 2019), raises concern for innovation potential and economic growth. Thai startups’ progress through funding stages poses a challenge, with only 16%, 7%, and 1% advancing to Series A, B, and C (Techsause, 2022). This attrition rate underscores potential support insufficiencies, potentially limiting innovative enterprise growth. Further complexity emerges from declining company registrations (Thawesaengskulthai et al., 2021), complicating Thailand's innovative enterprise goals. Addressing this requires holistic strategies to dismantle barriers and cultivate an encouraging environment for entrepreneurship.

Problems in the development of Thailand’s IDE ecosystem

Entrepreneurs in each country exhibit unique characteristics shaped by the specific context of their nation, a notion emphasized in the works of Colombelli (2016) and Audretsch et al., (2020). However, without careful consideration in the design of policies to support entrepreneurs, the resulting policies may lack genuine benefits. Therefore, this study rigorously identifies challenges within the IDEs ecosystem in the context of Thailand. To achieve this, primary data were collected through in-depth interviews with twenty-two (22) IDEs, complemented by secondary data from relevant literature. The subsequent analysis of the collected data, guided by keyword considerations, revealed three key factors contributing to the lack of successful startups/IDEs in Thailand, as summarized in Fig. 4 (refer to Table 3 for details on the interviews).

Fig. 4

Factors contributing to Thailand’s lack of successful startups/IDEs on the global stage—insights from in-depth interviews

Table 3 Finding and keywords from interviews with 22 IDEs in Thailand on factors contributing to the lack of successful startups/IDEs in Thailand

Through rigorous analysis of these data sets, three primary factors that have contributed to the challenges faced by IDEs in Thailand are summarized as follows: (1) The Entrepreneur (Team) Quality: a vital factor comprising abilities, attitude, inspiration, and other traits. Challenges in operator quality arise from lacking sincerity and motivation, limited innovation collaboration culture, narrow focus, closed-mindedness, and a deficiency in adopting a global mindset. Cultivating a competitive culture among Thai individuals for progress and sustainability is crucial for driving innovation. This finding resonates with Chincholkar’s study, (2021), emphasizing the importance of securing the right talent for successful startup scaling. Similarly, Alewamleh et al., (2023) noted that Jordanian startups also encounter challenges related to the quality and traits of their personnel. Ego, cultural aspects, motivation gaps, and insufficient skills contribute to unsuccessful startups; (2) Product and Market Fit: Ensuring product-market alignment is crucial. Challenges stem from insufficient market understanding and selecting an unscalable market. Imperfect products result from inadequate research due to deficient incubation and acceleration programs. Anitha and Veena (2022) stress market research, pilot testing, and peer competition for competitive success; and (3) Supporting System: Challenges in support arise from factors like uneven funding distribution, lack of continuity, and limited authority in managing Thailand’s Innovation Ecosystem. Inadequate government focus on vital projects, absence of viable business models for IDEs, and insufficient legislation hinder innovation-based businesses. Alewamleh et al., (2023) emphasize existing regulations and institutional practices as significant barriers for entrepreneurs in this context.

Mechanism for IDE investment ecosystem support for Thailand

This study proposes three strategic solutions, closely aligned with identified root causes, to effectively tackle challenges hampering Thailand’s IDE success. These strategies, vital for policy implementation, encompass talent management, ease of scaleup, and availability of funding, introduced in previous research (Thawesaengskulthai et al., 2021). The significance and potential impact of each strategy on fostering a conducive IDE environment in Thailand are comprehensively elaborated.

The Talent Management Strategy involves shaping employment policies to attract skilled individuals to startup teams, including incentives and international talent attraction. Emphasis is placed on developing proficient young professionals with attributes suitable for business operations.

The Ease of Doing Scale-up Strategy aims to facilitate the proliferation of innovation-driven enterprises (IDEs) through two primary avenues. It encompasses the revision of laws and regulations to incentivize startups and investors, enhancing business growth flexibility. Furthermore, it emphasizes a comprehensive support system, extending beyond finances, to include infrastructural assistance, information access, technology resources, and networking opportunities, fostering public–private sector collaborations.

The Availability of Funding Strategy addresses the critical need to generate appropriate investment returns, in line with associated risks, thus resolving funding challenges related to product-market alignment. This strategy focuses on furnishing accessible and suitable funding sources from both public and private sectors. Universities play a vital.

According to Deloitte’s report (2023), Thai stakeholders confront four substantial challenges impacting the startup ecosystem. The first, Economic (Market & Finance), pertains to early stage funding difficulties, particularly at the seed stage, from venture capitalists and other sources. Startups also face hurdles in competing with established corporations for opportunities and attracting talent within the Thai marketplace. The second challenge, Infrastructure, involves waning accessible market enablers like accelerators and incubators, along with limited connections to academic partners and global platforms. The third, People challenges, encompass recruiting local and foreign talent, inadequate mentorship from successful entrepreneurs, and a domestic market focus over global expansion. Lastly, the fourth challenge, Government & Regulatory, concerns restrictive regulations impacting startups, including complexities with Employee Stock Ownership Plans (ESOPs) and licensing applications. Investors also encounter inflexible regulations regarding partnership structures and preferred shares or convertible debt. Importantly, these challenges align with the three strategies proposed in this study. Furthermore, these three strategies are effectively implemented within a model known as the Thailand innovation-driven enterprise Hub or IDEs Hub (Thawesaengskulthai et al., 2021) (Depicted in Fig. 5). This hub serves as a vital link between the capital support systems and joint ventures in the public and private sectors, fostering an efficient joint venture ecosystem in Thailand’s IDEs. It can be asserted that achieving Thailand's goal of a 2% increase in GDP (equivalent to 370,000 million baht) is feasible through the IDEs Hub model, with the "university" at its core. Many universities in the ASEAN region have embraced innovation-oriented policies, albeit at varying levels of readiness (Chaipongpati, et al., 2022). To develop diverse innovations effectively, universities must attract and retain talented individuals as they form the cornerstone of the country's development. Talent Management plays a crucial role in fostering a pool of highly skilled individuals within the university and attracting external talent to supplement existing knowledge and expertise.

Fig. 5

Thailand innovation-driven enterprise hub (IDEs hub)

Promoting the influx of talent into university ecosystems involves motivational initiatives, regulations, and the Ease of Doing Scale-up strategy. Demonstrating research excellence attracts industry interest, leading to funding via the Holding Company. Successful innovations attract more industry investments, bolstering the Holding Company's value and generating university returns. The University Holding Company functions as a financial mechanism, leveraging its research innovation status. TusHoldings in China, founded by Tsinghua University, serves as a prime example of a thriving university holding company. TusHoldings fosters innovation and entrepreneurship, driving university growth, economic prosperity, and technological progress (Wang & Gao, 2022). University holding companies establish a symbiotic link between academia and the startup ecosystem. They bridge the gap between research and commercialization, fueling technological innovation and supporting startups. By fostering growth, providing financial assistance, and granting access to resources, these entities significantly influence national-level startup success. Consequently, their efforts greatly contribute to economic and societal advancement.

A comparative study of the current state of the measures and mechanisms for IDEs investment ecosystems in Thailand with best-case examples from foreign countries

In this section, the current measures/policies/mechanism in all three components (Talent management, Ease of doing scaleup, and Availability of funding) to support IDEs in Thailand has been collected and compared with those from foreign countries as best practices for further gap analysis to be an essential guideline for developing and improving measures to be practical and meet the needs of all stakeholders. The information on policies and measures supporting startups in Thailand and other countries was gathered from credible and authoritative sources, including government websites, relevant organizations, the GenGlobal “Atlas: GEN’s Research + Policy Portal” database (https://www.genglobal.org/atlas), as well as reports from Deloitte’s Future of the Thai startup and venture capital ecosystem (Deloitte, 2023), Deloitte's Survey of Global Investment and Innovation Incentives (Deloitte, 2020), and Worldwide R&D Incentives Reference Guide 2020 (Ernst & Young Global, 2020). The information on measures and mechanisms to support IDEs/Startups in three aspects is shown in Table 4.

Table 4 Measures/policies/mechanisms supporting IDEs in Thailand and best-case examples from foreign countries in the aspects of talent management, ease of doing scaleup, and availability of funding

The comparative analysis underscores Thailand’s comprehensive policies to bolster IDEs across three facets. Nonetheless, these measures, while extensive, lack full integration and efficacy in fulfilling national objectives. The study conducts a comprehensive comparative examination of Thailand’s IDE framework alongside strategies from other nations, revealing critical gaps. Findings include:

Talent Management: Thailand faces challenges in attracting foreign talent due to restrictions on permanent residency or citizenship. IDE training programs lack outcome-focused approaches and experienced mentors. Other countries offer incentives for foreign talents and emphasize practical learning, leading to highly skilled individuals across age groups.

Ease of Doing Scaleup: Overlapping laws governing startups, SMEs, and listed businesses create inefficiencies. Tax benefits for Intellectual Property hinder IDE growth. Contrarily, other countries facilitate scaleup through diverse tax incentives, investment support, and business exit strategies.

Availability of Funding: Thailand's funding allocation for IDEs is limited, with inadequate support from VC, Angel groups, and Accelerator Programs. Domestic focus neglects foreign startups. Funding distribution across industries lacks targeting, while specific agencies dominate developmental goals. Collateral requirements for startup loans impede IDEs. In contrast, other nations align funding with national targets and offer specialized loans.

The analysis highlights areas for Thailand to enhance IDE support mechanisms. Addressing these issues and adopting successful strategies from other countries can nurture a thriving IDE ecosystem in Thailand.

Policy recommendations and operating model with practical working procedure for creating IDEs suitable for Thailand

The previous section critically assessed pain points in Thailand’s IDE joint venture ecosystem. The analysis aims to offer tailored recommendations and an operational model for nurturing innovation-based entrepreneurs. Notably, Thailand lacks a centralized organization overseeing national innovation goals, in contrast to Israel’s Israel Innovation Authority, which streamlines support for startups (Deloitte, 2023). Thailand's existing innovation-supportive bodies operate within specific contexts, potentially leading to fragmented approaches. Enhanced communication and coordination among these entities are needed for a cohesive and comprehensive innovation ecosystem. The proposed policy recommendations and operational model seek to bridge this gap, fostering a unified and effective environment for IDEs in Thailand.

Policy recommendations

Considering the ever-increasing emphasis on innovation as a catalyst for sustainable economic growth and development, policymakers around the world are actively seeking effective strategies to promote and nurture IDEs. Thailand, as a rapidly emerging economy, recognizes the pivotal role played by IDEs in driving technological advancements, job creation, and global competitiveness. However, to fully capitalize on the potential of IDEs, it is imperative to devise comprehensive and well-coordinated policy recommendations that address the underlying challenges hindering their growth and success. This paper presents a set of policy recommendations aimed at fostering an enabling environment for IDEs in Thailand as follows.

• 1) Establishment of Thailand IDEs Strategic Board (IDEs Board): The IDEs Board should be formed with clearly defined responsibilities and seamless integration with other relevant committees. This board should comprise senior executives from both government agencies and Thailand's innovation ecosystem. Its primary objective should be to drive the development and enhancement of measures and mechanisms aimed at fostering IDE in the country.

• 2) Integration of Agencies in the Innovation Ecosystem: To streamline efforts and promote cohesive progress, it is essential to integrate agencies operating within the innovation ecosystem under a unified strategic framework and shared objectives. This integration will help reduce redundancy and ensure a collective pursuit of common goals in advancing Thailand's IDE promotion endeavors.

• 3) Stakeholder Engagement in Developing Measures and Mechanisms: A systematic collaboration with the private sector is crucial in identifying pertinent issues and challenges faced by stakeholders. This collaboration should extend to the development and trial of measures and mechanisms to effectively drive innovation-based businesses in Thailand. By actively involving the private sector, the implementation of these measures can be fine-tuned to suit the specific needs and realities of the innovation ecosystem.

Operating model and practical working procedure

As policy recommendations suggested above, the creation of an operating model and practical procedure is essential to ensure a well-structured, efficient, and coordinated approach to implementing policy recommendations. It enhances the likelihood of successful outcomes and supports the long-term sustainability of policies designed to foster IDEs and economic growth. The details of the operating model along with practical working procedure are explained below.

Establishment of the strategic board through the following procedure:

The establishment of the National Innovation-Based Business Driving Policy Committee involves appointing.

• Board of Investment (BOI) as the chairman. BOI plays a crucial role in enhancing Thailand's competitiveness through innovation, R&D, and value addition across diverse sectors, including agriculture, industry, and services. As the chairman, BOI also facilitates overseas investments to elevate the global position of Thai businesses. Its specific focus on fostering the IDE investment ecosystem is pivotal in driving Thailand’s successful transition to Industry 3.0. BOI's strategic importance lies in providing tax-related and non-tax-related benefits to advance the landscape of innovation-based businesses in the country.

• Office of the National Higher Education, Science, Research and Innovation Policy Council (NXPO) as committee's vice chairman. NXPO supports and facilitates the Higher Education Science Policy Council National Research and Innovation, providing essential input on policies, strategies, budgets, and regulatory amendments related to higher education, science, research, and innovation. This authority empowers the Board of Directors to effectively set national goals and foster IDE tailored to Thailand's context.

• Key government agencies within Thailand's innovation ecosystem as the Board member, namely:

  • o The National Innovation Agency (NIA) promotes the establishment of a national innovation system.

  • o The Digital Economy Promotion Agency (DEPA) focuses on investment and business operations in the digital innovation industry, including personnel development.

  • o The Department of Intellectual Property (IP) fosters creativity, commercial utilization of intellectual property, and IP rights protection to enhance trade competitiveness and economic growth.

  • o The Office of the Council of State investigates and gathers information related to its work, drafts laws, and provides opinions on law proposals.

  • o The Digital Council of Thailand (DCT) enhances digital competitiveness for sustainable development, fostering cooperation between public and private sectors and collaborating with domestic and international agencies.

  • o The Office of the Securities and Exchange Commission (SEC) promotes and supervises capital markets and related business operators' fundraising, products, and services.

• The Executive Team (management team) encompasses various sectors within the innovation ecosystem, including:

  • o Private sector: A primary driving force responsible for determining the ecosystem's direction, budget allocation, international partnerships, and access to various collaborators.

  • o Public sector (Government): A supportive entity responsible for managing the system in alignment with the country's direction, including operating according to national strategies and implementing regulatory reforms.

  • o International advisory board: A supporting body responsible for advising on partner collaborations, technologies, knowledge exchange, and engaging foreign experts.

  • o Implementation teams (regular working groups): Responsible for identifying potential businesses for cooperation with VC, organizing activities, managing public utilities, and monitoring performance according to the IDEs Board's policy.

Specifying of duties and powers for the National IDE Driving Policy Committee as outlined below

• 1) Formulate policies aimed at driving the growth of national IDEs.

• 2) Approve the overarching strategy for developing the joint venture ecosystem within IDEs and devise measures and mechanisms to foster the emergence of IDEs in Thailand.

• 3) Provide cohesive policies to agencies operating within the innovation ecosystem, with the goal of reducing redundancy and fostering collaboration to achieve common objectives among these agencies.

• 4) Declare target industries and enumerate the benefits that will be extended to entrepreneurs engaged in IDEs.

• 5) Grant approval for plans, projects, and budgets aimed at advancing IDEs.

• 6) Issue regulations, procedures, and conditions governing joint investment in IDEs between the public and private sectors.

• 7) Nominate an ad-hoc committee or sub-committee to execute assigned policies effectively.

• 8) Monitor and evaluate the implementation of national IDE drives, while actively addressing challenges and obstacles that may arise during the process.

• 9) Undertake any other pertinent actions necessary to fulfill the country's objectives in driving IDEs.

These enumerated duties and powers empower the committee to orchestrate and supervise the development of IDEs in Thailand effectively.

Establishing cohesive and interconnected operations and communications within the innovation ecosystem

It can significantly contribute to the successful implementation of driving IDEs. To achieve this, the following procedure is proposed.

• 1) Defining Common Goals: The first step involves setting common goals that align with the objectives of driving IDEs. However, it is crucial to consider factors such as available time, resources, operating expenses, personnel with the requisite knowledge, and support tools. By carefully managing these aspects, the formulation of common goals can be effectively tailored to the specific context of the innovation ecosystem.

• 2) Collaborative Teamwork: To drive IDEs, it is essential for various agencies within Thailand's innovation ecosystem to collaborate as a team. This collaboration entails systematically linking the missions of different agencies, thus fostering the generation of new ideas and innovative approaches.

• 3) Communication Strategy: A well-crafted communication strategy is imperative to propel operations toward mutual success. Strategic ideas must be effectively conveyed to all stakeholders involved in the innovation ecosystem. By fostering effective communication and working together harmoniously, the operation can be directed toward achieving common goals. In addition, cultivating a positive attitude towards work and promoting a sense of unity among stakeholders can significantly contribute to the success of driving innovation-based businesses.

Cooperation with the private sector to create continuity in joint operations

The imperative for continued collaboration with the private sector to ensure sustained joint operations for fostering IDEs in Thailand remains a pertinent challenge. Addressing this, the private sector has taken a proactive step by establishing “Innovation Club Thailand” through a collaborative effort involving private sector entities, investors, government agencies, and academic institutions. This consortium is comprised of experienced innovation executives who volunteer their expertise to drive transformative economic and social change, thereby bolstering the capacities of IDEs. Operating in tandem with this public–private collaboration can enable the government to allocate resources effectively and cater to the specific needs of the private sector. The operational framework of Innovation Club Thailand is as follows:

• 1) Establishment of a Steering Group: This group consists of executive-level volunteers dedicated to driving innovation within the country’s economy. These individuals, known as "members" play a pivotal role in supporting the implementation of diverse projects undertaken by Innovation Club Thailand.

• 2) Annual Convention: A crucial aspect of the collaboration involves organizing an annual convention, bringing together key stakeholders from the private sector, investors, government bodies, and educational institutions. The convention serves as a platform to assess progress and identify areas for development concerning measures, mechanisms, and projects geared toward nurturing IDEs.

• 3) Innovation Dashboard: Innovation Club Thailand aims to develop an “Innovation Dashboard,” which serves as a survey tool to gauge Thailand’s innovation landscape vis-à-vis other countries. This information will serve as a foundation for establishing vital indicators to guide policy-driven decision-making and support long-term research initiatives.

Four key areas align the operating model with strategies for IDEs’ success in Thailand

Through sustained collaboration with the private sector facilitated by Innovation Club Thailand, Thailand has the opportunity to establish a robust mechanism for driving IDEs. This ongoing partnership creates an environment conducive to innovation, positioning the country to effectively advance its goal of fostering a thriving ecosystem for IDEs. In the context of policy recommendations and the establishment of the IDEs Board, effective coordination among sub-units is crucial to align the country's objectives and promote collaboration toward common goals. This alignment can lead to transformative outcomes, including the cultivation of a culture of innovation, global business expansion, GDP and job growth, and the development of innovation-driven industry and university models. Successful implementation of policy recommendations hinges on careful consideration in four key areas, ensuring the alignment of the operating model with strategies for IDEs’ success in Thailand.

Innovation-focused IDEs

The policy-level committees should prioritize support for businesses aligned with the country's economic and societal needs, capitalizing on Thailand’s current strengths, such as Agriculture and Food, Bio-Circular-Green Economy (BCG), Healthcare, Logistic, and Education sectors as mentioned in the section of “the current state of investment ecosystem in Thailand”.

Funding model

Strategic allocation of funding for IDEs development is crucial. It is proposed to allocate 20% of the funding for supportive infrastructure, including establishing innovation hubs, creating an IDEs Dashboard for tracking indicators and a database system for entrepreneurs, and providing guidance for foreign investors. In addition, 20% of the funding should be dedicated to talent management, which involves attracting academic leaders in research and development, offering scholarships and exchange programs, and providing consulting projects to enhance the country’s innovation potential. The majority, 60%, of the funding should be directed towards innovation-based projects and fostering collaborations for investing in potential businesses.

Trusted partners

Collaboration among the public, private, and education sectors is vital for the global competitiveness and expansion of Thailand’s IDEs. A noteworthy illustration of such collaboration is evident in the Innovation Club Thailand, which stands as a trusted partner within the country’s innovation ecosystem. Established through collaborations with both domestic and global partners, including Chulalongkorn University, the Innovation Club Thailand exemplifies the significance of cooperative efforts. This emphasis on collaboration extends to the broader triple helix framework, encompassing government, industry, and academia. Strengthening cooperation within this framework has the potential to attract a more extensive pool of skilled individuals and cultivate a highly competent cohort of workers and researchers. Consequently, such collaboration contributes to heightened knowledge and technological outputs, fostering an economy that is not only more prosperous but also more competitive (Villegas-Mateos, 2023).

Supporting better policies and regulations

Close collaboration between policy developers, innovators, and investors is crucial in driving IDEs' success. Recommendations should be transformed into new policies and regulations through benchmarking international best practices, reforming regulations hindering IDE creation, and creating procurement structures to promote small IDEs.

By addressing these key areas and aligning the operating model with proposed strategies, Thailand can create an environment conducive to the growth and success of IDEs. This, in turn, propels the nation towards sustainable economic development and enhanced global competitiveness.

Conclusion

To foster sustained success in Thailand’s innovation economy, the strategic integration of IDEs emerges as a pivotal approach. This requires a holistic understanding of science, technology, innovation, and creativity to elevate the potential of both the manufacturing and service sectors, ensuring a trajectory of sustainable growth. An essential facet of this approach involves revisiting regulations and laws to eliminate constraints and introduce incentives for innovative business practices. Concurrently, the development of measures and government services to facilitate entrepreneurial innovation, along with the creation of an investment ecosystem equipped with ample funding and support mechanisms, is instrumental in executing economic activities with efficiency and adaptability.

Several factors contribute to the realization of this outcome, including the funding value of Thai businesses beyond the IDEs Focused Industry, disjointed mechanisms supporting IDEs across different departments, the need for a more comprehensive incubation program for IDEs requiring mentorship from inception to success, and laws and regulations lacking a conducive environment for IDE operations. Critical obstacles hindering enterprise growth include the quality of entrepreneurs (team), product and market fit, and the support structure. Entrepreneurs face challenges related to uncompetitive products, stemming from a lack of profound knowledge, effective business incubation, acceleration programs, and insufficient laws, measures, and policies supporting creation and development. Hence, fostering an environment conducive to innovative enterprise operations, including tax measures, investment attraction, and promoting exports or accessing foreign markets, emerges as an urgent and essential agenda. For Thailand to establish a flourishing ecosystem of collaborative ventures in IDEs, driving the new economy toward success requires a dedicated focus on three crucial strategies: Talent Management, Ease of Doing Scaleup, and Availability of Funding. This demands the implementation of an operating model with practical working procedures tailored to the unique context of Thailand.

While the present study provides valuable insights into the role of IDEs in Thailand's innovation economy, its applicability to other countries and its understanding of IDE success factors could be enhanced by future research employing comparative analyses. Comparative analyses would examine the similarities and differences in IDE success across different nations with distinct economic landscapes and entrepreneurial ecosystems, allowing for a more comprehensive understanding of the generalizable patterns and context-specific nuances of IDE success.