rural entrepreneurship: opportunities for rural development

Rural Entrepreneurship: Opportunities for Rural Development

By John C. Allen, Director

Jim Goodwin, Senior Program Officer

Western Rural Development Center

Utah State University

The Montana Rural Community Conference Billings, Montana January 15-17, 2008

Presentation Overview


1.Research Questions

• What role does the community play in fostering entrepreneurial behavior?

• Does community structure influence the number of new jobs and businesses?

2.Findings

Self-Development Projects


• Involvement in the effort by local organizations

• Substantial investment of local resources

• Local control of the resulting enterprises

The 5 Recognized Strategies of Development Development


1. Entrepreneurship

2. Business Retention and Expansion

3. Industrial Recruitment

4. Workforce Development

5. Tourism

THEORETICAL FOUNDATION- Community Development


• Entrepreneurship – an economic development strategy embraced within broader concept of community development

• Community development – “….group of people in a locality initiating a social process (i.e., planned intervention) to change their economic, cultural, and/or environmental situation.”

• Development in the community vs. development of the community

EDGE: A case study Enhancing, Developing, and Growing Entrepreneurs


• Nebraska rural entrepreneurial training program• Hosted by local communities, organizations and

associations• Develops community capacity and supports

launching of new businesses and supports expanding existing businesses.

Desired Outcome


• Building community capacity through facilitating new structural arrangements

• Increased entrepreneurial activity within the community and region

• The definition of entrepreneurial activity is expanded to include :

• Civic entrepreneurship

• Social entrepreneurship

Both enhance a community’s capacity to respond to change.

First Research Question


What role does community play?

RESEARCH METHODS


• First stage involved in-depth interviews with local program leaders and knowledgeables to obtain their insight and assessment on the program history, organization, funding, leadership, successes, and failures.

RESEARCH METHODS


• Eight communities selected, based on:– Geographic dispersion across the state– Variation in community size but with a focus on

rural/small city– Differences in perceived success of the programs– Differences in organizational principles

• Key informants in each community were selected for interviewing. The number varied by community from two through five, depending on how many had been heavily involved in the program. Altogether, 25 program leaders were interviewed.

RESEARCH METHODS


Programs were classified as to their level of success.

• Most successful – have held at least five classes, have a supportive and involved coalition, and have strong program leadership.

• Moderately successful – have held fewer classes and have deficiencies in coalition involvement and support and/or program leadership.

• Least successful – have held no more than two classes, have serious deficiencies in coalition involvement and support and/or program leadership, and have ceased to function.

FINDINGS


Phases of

Successful Development

Awareness and Interest


• Awareness addresses the issue of knowledge of the problem and that there is a solution to the problem. All respondents in the eight communities recognized some degree of economic problems their communities were suffering, especially in relation to being located in a rural or remote setting. They also perceived EDGE as having the potential to stimulate economic activity and thereby generate jobs and income.

Awareness and Interest


• Interest addresses the issue of motivation to act upon the problem after awareness of the problem and a potential solution occurs. Although there was broad dissemination of information on EDGE through the extension system, a comparatively small number of communities in relation to the total number in the state actually became interested in and implemented the program.

ORGANIZATION


• Organization addresses the issue of establishing the social structure for implementing the program. EDGE structure consists of two critical elements:

1. A program coordinator to insure sufficient human resources for organizing and implementing the program.

2. A broad-based coalition of local leaders and other interested individuals.

ORGANIZATION: Coordinator


Attributes of position contributing to program success and longevity:

– Committed and locally situated leadership

– Sufficient time and resources

ORGANIZATION: Coalition


Attributes contributing to program success and longevity:

– Large (25-30 members)– Broad based representation– “Macroentrepreneurs”– Empowered

INITIATION addresses the issue of resource mobilization


• Funding for the program comes from state grant, student tuition, coalition member contributions, and lead organization contributions.

• Large, committed coalition with rotating members helps sustain funding.

IMPLEMENTATION addresses the issue of resource application


• This includes hiring the instructor, recruiting students, and teaching the classes. – Important instructor characteristics include academic

credentials for teaching but also personal experience in operating a business or at least working in the business world.

– Coalition involvement is important in student recruitment.– Local media representation on the coalition is important in

student recruitment.

CONFIRMATION addresses the issue of institutionalization of the program in the local community


• EDGE program communities decide on an annual basis whether or not to continue the program based on formal evaluations conducted with the participants, perceptions of impacts on the community, and availability of resources.

• Successful programs had initial successes sufficiently impressive to institutionalize the programs.

• Even with initial success, disenfranchisement can occur if coalition members do not perceive beneficial impacts for their organizations or the community.

SUCCESSION addresses the issue of program continuity


This must be addressed when there is a loss or change in a local program’s leadership, such as the departure of the coordinator or the lead organization’s representatives.

• Programs need to establish some mechanism for continuity in leadership.

• In programs where the key leader has left, program activities have diminished and in some cases ceased completely.

Second Research Question:


Does community structure influence the number of new jobs and businesses?

A Quantitative Look at Jobs and Businesses Created


In-depth interviews used to identify macroentrepreneurs.

Community selection was based on:1. geographic dispersion

2. variation in community size

3. differences in perceived success of entrepreneurial support

Mail Survey of Macroentrepreneurs


• 231 macro entrepreneurs identified in seven communities

• 125 completed surveys

• Response rate =55%

FINDINGS


Statistical analysis found:• Voluntary structure of community is important in

enhancing job creation and new business development.

• Coalition diversity were important variables in explaining increased job creation and business expansion

• Macroentrepreneurs play an important role in facilitating entrepreneurial activity at the community level.

What relevance is there to government and communities?


• Entrepreneurial activity can be viewed as individual and community activity

• How and if a community organizes itself impacts number of jobs and businesses started and expanded

• Development of community impacts entrepreneurism

References


Korsching, Peter F. and John C. Allen. “Locality Based Entrepreneurship: A strategy for community economic vitality.” Community Development Journal Vol 39 No. 4, 2004 pp. 385-400.

Korsching, Peter F. & John C. Allen. “Local Entrepreneurship: A Development Model Based on Community Interaction Field Theory.” Journal of the Community Development Society. Vol. 35, No. 1, 2004. pp. 25-43.

Presented at <<insert conference name and date>>

WRDC – Engaging the Future

John C. Allen, [email protected]

Director, Western Rural Development CenterProfessor, Dept. of Sociology, Social Work & Anthropology

Jim [email protected]

Senior Program OfficerWestern Rural Development Center

Utah State University8335 Old Main HillLogan, UT 84322-8335(435) 797-9732(435) 797-9733 (fax)http://extension.usu.edu/wrdc

mailto:[email protected]