Strategies for Supporting Rural Entrepreneurship
-
Upload
nado-web -
Category
Government & Nonprofit
-
view
206 -
download
1
Transcript of Strategies for Supporting Rural Entrepreneurship
STRATEGIES FOR SUPPORTING RURAL ENTREPRENEURSHIP
MICHAEL W-P FORTUNATOSAM HOUSTON STATE UNIVERSITYCENTER FOR RURAL STUDIES
Presented at NADOOctober 16, 2016
PREVIEW• Background• Urban and rural
entrepreneurship• Approaches to
entrepreneurship development• How to catalyze
action
Who is an Entrepreneur?• Job creators – From 1980-2005, all net job growth in the U.S. was
from firms less than five years old
• Risk-takers – Only half of new firms in the U.S. survive to age
five – But, about half the firms on the 2009 Forbes 500
list were launched during a recession – Only 16 percent of new U.S. firms in 2009 were
started with venture funding, with over 67 percent funded by personal debt in 2008 • (Source: Kaufmann Foundation 2012)
Who is an Entrepreneur?• In the U.S., most likely to be in the 50-64
age range, least likely to be in the 20-34 age range – Creative class anyone?
• 70 percent are men • 81 percent are white, followed by 9
percent African-American, 6.6 percent Hispanic, and 4 percent Asian
• Startup rates very consistent over time • (Source: Kaufmann Foundation 2012)
Who is an Entrepreneur?• Several “typologies” – Serial vs. Single – Opportunity vs. Necessity – Investment vs. Lifestyle – Farm vs. Nonfarm – High-tech vs. Low-tech – High-growth vs. Low-growth – Venture capital vs. personal funds • Which are more likely to stimulate economic
growth? • Which are more likely to exist in rural areas?
Who is a RURAL Entrepreneur?
• Are rural entrepreneurs different than urban entrepreneurs? – Henderson (2002) suggests that: • Rural areas actually had higher self-employment
growth in the 2000’s than urban areas • Higher likelihood of employment in ag and
natural resources, manufacturing, and services than urban areas
– But… • Rural entrepreneurs earn less, conflated with
lower education levels (Nolan 2003) • Micropolitans have lowest rates overall
(Henderson 2002)
THE ECOSYSTEM
Growth
Lifestyle
Culture
Meet
ing
Need
s
Iden
tity
Sustainabilit
yIn
nova
tionProblem Solving
Entrepreneurship: An Urban Phenomenon• “High Growth” entrepreneurship tends
to be highly concentrated in urban areas – Spatially driven by agglomeration economies
(Acs and Armington 2006) – Spillover effects from major research
universities (Audretsch and Lehmann 2005) – Supported by physical and human
infrastructures (Henderson et al. 2007) – Same in Europe (Glaeser and Kerr 2009)
• But, highly variable across the U.S. – Different county types require a custom
approach (Goetz and Rupasingha 2011)
Why Does Any of this Matter?
• Think about it… – How we define entrepreneurship eventuates
how we cultivate what we have defined • Are most rural/lagging regions appropriate for
high-tech, high-growth development • Are entrepreneurship development programs
really helping rural areas? • Do local residents even have a voice in the
matter? – If entrepreneurs are so beneficial to the
economy and job creation… • … are current approaches therefore biased
against rural areas, creating barriers for citizens?
Why Does Any of this Matter?
• But… –We can’t just plop down a university, tech
sector, or set of urban networks • Even if we did, is this culturally appropriate for
rural areas?
Why Does Any of this Matter?
• … and, Lichtenstein and Lyons (2001) have shown the inefficacy of most entrepreneurship programs – Compete for the same entrepreneurs – Huge overlap in offerings – Firm-by-firm rather than community-wide
• State-level efforts ineffective (Dabson et al. 2003)
• Can we build a better program? – Can we build a better culture for
entrepreneurship?
• Low population density
• Limited local demand
• Isolation from critical networks
• The “real” Wal-Mart phenomenon
• No spaces/institutions for innovators
• Limited tech access/uptake
OPPORTUNITY • FOOD• Growth in demand• New product segments• Demand for local/organic• Global luxury
• ENERGY• Global growth 1.5% per year
(EIA 2013)• Diversification• Low environmental impact
• WATER• Drought risk• New irrigation/ag techniques• Clean water technology
• LIFESTYLE• Families/retirees• Room to think• Low overhead
Rural Entrepreneurship Advantage• Entrepreneurs are natural problem-solvers, and can
quickly develop solutions to persistent local problems. Got a tricky local issue? Give it to a group of local entrepreneurs to solve with input from citizens.
• Entrepreneurs are more likely to stay in the communities where they launch their business, unlike large companies based elsewhere.
• Rural entrepreneurs may create fewer jobs than large companies, but those jobs are more likely to be tailored to the skills available in the local community.
• Entrepreneurs can provide goods and services in important niches that meet local tastes and preference. They do this much better than Wal-Mart.
• Entrepreneurs often participate in community and civic life.
Rural Entrepreneurship Advantage• When something goes wrong with their product or
service, you can talk to an entrepreneur to make things right.
• Entrepreneurs often take paths others find too risky, serving as either warning or encouragement to others – a public service either way.
• In some rural places, creating even 5 jobs (instead of 500) still makes a big difference.
And my favorite:
• Entrepreneurs help bring creativity and imagination to the community, and can serve as a role model for others who want to take creative risks.
Alternative Entrepreneurship Development Strategies• Let’s go back to our background as
community scholars: – Networks matter (Granovetter 1973) – Development of social fields and the
broader community field in a place people care about (Wilkinson 1991)
– Places contain assets of all sorts that can be used as building blocks for development (Kretzmann and McKnight 1993)
– Development requires purposive action (Wilkinson 1991)
Local Society and Rural Entrepreneurship• In deeply lagging areas, there may not be
sufficient resources for “mainstream development” – It costs too much to build incubators,
sophisticated infrastructure, programs
• Can we capitalize on making the culuture more supportive for entrepreneurs? – Hustedde (2007) thinks so • Culture plays a vital role in supporting
entrepreneurship
And Knowledge Systems Matter
• Mentoring as tacit knowledge – Non-codified knowledge transfer through
mentoring • Storey (1994): People more likely to become
entrepreneurs if they have parents who are entrepreneurs
• Blanchflower (2007): Having close relations who are entrepreneurs very important to entrepreneurial likelihood
• New approaches use mentoring – Entrepreneurship Development Systems
(EDS) (Lichtenstein and Lyons 2001)
National/Regional PolicyFacilitating Conditions
Entrepreneurial CommunitiesEntrepreneurial Ecosystem
Entrepreneurship Development Approaches
National/Regional PolicyFacilitating Conditions
Entrepreneurial CommunitiesEntrepreneurial Ecosystem
• Like a recipe book • About the stuff/programs in
your community • Spatial determinants of
success
• Driven by governments/quasi-government organizations
• Beneficial legal framework • Incentive systems
• Entrepreneur-led • PROCESS of entrepreneurship
development • Highly adaptable and
stochastic • Develops along lines of natural
advantage • Evolves over time
• Community-led • PROCESS of
entrepreneurship development
• Inheres in networking/relationships
• Building a common ethic/culture
National/Regional PolicyFacilitating Conditions
Entrepreneurial CommunitiesEntrepreneurial Ecosystem
• PRO: Conceptually simple • PRO: Easy to analyze - you’ll
be popular at conferences • CON: Not process/people
oriented
• PRO: Looks great politically • PRO: Provides some
legitimately good incentives • CON: Historically ineffective • CON: Wrong incentive
structure
• PRO: Highly durable/sustainable due to adaptive nature
• PRO: Entrepreneur-led and highly credible
• CON: Hard to control • CON: Can be necessarily brutal
• PRO: Highly effective and cheap!
• PRO: Also builds community beyond entrepreneurs
• CON: Sustainability • CON: Often not entrepreneur-
led
Entrepreneurs also need• Cultural/human support • An ethic of collaboration • A minimal amount of resistance (via
negativa) • PROCESS ELEMENTS THAT
APPLY TO THE GROUP • Among entrepreneurs • Between entrepreneurs and their
communities
Power Systems in Communities
• “Company Towns” –Where is the tacit knowledge? • Entrepreneurship not viewed as legitimate or
valued lifestyle – Get a job
– Core/periphery problems may stifle entrepreneurship • In places where employment is valued over self-
sufficiency • Necessity entrepreneurs not very successful
– Only leads to bad publicity
NEW MODEL OF ENTREPRENEURIAL DEVELOPMENT
COMMUNITY
IDEA
REFI
NE
INSPIRE
PROTOTYPE PROTOTYPE PROTOTYPE
FAIL SMALL TRY AGAIN
SCALE UP!
7) Learn Your ABC’s
–B – Belonging: “Let’s Work Together” in a downtown group
–C – Competence: “Let’s Try New Things” and create a local space for innovation
–A – Autonomy: Freedom to pursue individual interests, not dictated by broader group. Direct competition welcome
12 PEOPLE YOU MEET IN COMMUNITIES
1) Facilitator 2) Very quiet, shy, and
awkward 3) Extremely outgoing &
popular 4) Super agreeable 5) Professional
contrarian 6) Bizarre off-topic guy/
lady
7) Detail-oriented analyst 8) Abstract high-creative 9) Wants to get to work
now 10)Scared of new ideas
& change 11)Just be yourself 12)Just be yourself
!!• Set some rules
for the group. •What is essential
for good communication? •How will you
handle failure/bad ideas?
7) Learn Your ABC’s
–B – Belonging: “Let’s Work Together” in a downtown group
–C – Competence: “Let’s Try New Things” and create a local space for innovation
–A – Autonomy: Freedom to pursue individual interests, not dictated by broader group. Direct competition welcome
NEW MODEL OF ENTREPRENEURIAL DEVELOPMENT
COMMUNITY
IDEA
REFI
NE
INSPIRE
PROTOTYPE PROTOTYPE PROTOTYPE
FAIL SMALL TRY AGAIN
SCALE UP!
??• Solve the top two
simultaneously
• Who will take ownership over the first steps?
• What can they contribute that is unique?
!!•Create a basic
charter/identity. •How will you
keep people coming back? •How will you
expand membership?
GET YOUR ECOSYSTEM MOVING!
• Get your innovators together
• Create a safe space for sharing ideas
• Foster and involve entrepreneurial leadership
• Tolerate failure, celebrate success
• Prototype, prototype prototype, THEN scale up!
Leaping Barriers• Focus on building local interaction – Effective ways of convening people who
normally do not communicate
• Focus on building purpose – Everyone interacts, but about what? • Strategic, focused interaction around small business
• Focus on building voice – The floodgates open when small business
has a seat at the table • Taken seriously
Conclusions – New Directions?
• Community theory may unlock some secrets for developing a more supportive entrepreneurship culture – And a broader community culture as well • Use one to fuel the other
• Create alternative economies based on different values – Not just alternative products, services, or
markets
Conclusions – New Directions?
• Encourage non-traditional participation and collaboartion – Start small and scale up! – Culture of prototyping and quick action
Questions• Michael W-P Fortunato • Sam Houston State
University • Center for Rural Studies