Supporting rural entrepreneurship: a review of conceptual developments from research to practice

Abstract

Entrepreneurship development is increasingly seen as a promising alternative to traditional economic development, as it unlocks the potential of local citizens to create jobs and serve local tastes and markets. However, while much of the literature in entrepreneurship is dedicated to high-growth, high-tech development and its job-generating qualities, is this necessarily a good route for rural areas seeking to create jobs? Or, is rural entrepreneurship distinct from entrepreneurship as a discipline, presenting its own opportunities and challenges? This article presents a review of the literature on rural entrepreneurship, and argues that rural entrepreneurship is a distinct area of entrepreneurship research and practice, with alternative opportunities for local development that do not necessarily follow the mainstream literature.

Keywords:

• rural community development
• rural economic development
• entrepreneurship
• regional development
• agriculture and community

Acknowledgment

I am deeply indebted to Dr Diane McLaughlin and Dr Theodore R. Alter of Penn State University, whose review and commentary of this work have been fundamental in shaping my ideas, and whose support, mentorship, and colleagueship has been extraordinary. Thanks also to Grace Emmerling of Penn State, whose assistance in preparing this manuscript was tremendously valuable.

Notes

1. In reality, a strong emphasis on high growth and profit-seeking entrepreneurship in the literature suppresses the idea that not all urban entrepreneurs fall into this category, either.

2. See Shane (2009) for an inverse approach. Shane argues that supporting entrepreneurship is bad public policy because it entrusts people without extensive entrepreneurial experience to start businesses. This is “bad” because such individuals often launch low-growth, low-value businesses that often fail and create few jobs. I argue that Shane’s perspective on this matter is antithetical to community-oriented development by elevating high-tech and high-growth startups by individuals who are already successful to a level of inherent superiority.

3. Self-employment is commonly used as a proxy for entrepreneurship in the research context. See Goetz (2006) for an empirical example and study rationale.

4. While interesting, Walzer et al.’s (2007) metric for “potential entrepreneur pool” also included variables like being male (found to be important in Blanchflower, 2007) and Hispanic ethnicity (found to be an important predictor of self-employment in Lasley & Hanson, 2003, but later disputed by evidence in Blanchflower, 2007 – possibly because Lasley and Hanson’s analysis is constrained to the Midwest and dubiously assumes that because there is high population growth among Hispanics, there is also high entrepreneurship growth). However, this explanation fails to elaborate the processes by which businesses arose there in the first place, or what is contributing to young, educated individuals staying in the region. More recently, the Kaufmann Foundation (2012) found that most American startups are founded by individuals in the 50–64 age group. While there is mixed support regarding the importance of a young, educated population, it says little about entrepreneurship development in areas that lack one.

5. Export-oriented sole proprietorships started by individuals from outside the community.

6. Export – oriented businesses with multiple employees, generally started by individuals from outside the community.

7. An exception is the Small Business Development Center (SBDC), a division of the US Small Business Administration (SBA), that provides technical and startup assistance for free to aspiring entrepreneurs. The SBA also offers competitive low-interest small business loans. However, rural areas have been found to have great difficulty accessing these resources, and both rural SBA lending and funding to SBDCs in rural areas have declined over the past few decades (Crain & Hopkins, 2001). Alternatively, the Community Development Financial Institution fund of the US Treasury has seen only 11% of its disbursements go to rural areas (Dabson et al., 2003).

8. Incentives are different depending where one investigates, although a comprehensive listing of such incentives in Pennsylvania would be a value-added product to any entrepreneur seeking the appropriate type of assistance.