Entrepreneurship, Community, and Community Development

Michael W-P Fortunato, Theodore R. Alter

• Publisher: Routledge
• Year: 2017
• Print ISBN: 9781138081185
• eBook ISBN: 9781351623391
• Edition: 1
• Topic: Social Sciences
• Subtopic: Global Development Studies
• Index: Social Sciences

While entrepreneurship is widely cited as playing a key role in economic development, job creation, and advances in well-being in capitalist nations, there has been an overwhelming focus on the firm, firm founders, and founders' strategies and decision-making processes. Only more recently, the important link between communities and entrepreneurs has emerged as a new frontier in entrepreneurship research.

This book brings the emerging nexus between community and entrepreneur to light by exploring the mutual impact that communities and entrepreneurs have on one another. It focuses on how entrepreneurship development can push beyond the traditional emphasis on economic growth: from enriching the local lifestyle to building self-sufficiency; from attracting new markets to rediscovering traditional work; from the highest tech enterprises to the most ancient crafts and trades. The authors cover a wide variety of topics including rural community entrepreneurship development and culture, innovation and regional development, community-based enterprise learning, and urban revitalization strategies.

This book was originally published as a special issue of the journal Community Development.

Community entrepreneurship development: an introduction

Michael W-P Fortunato and Theodore Alter

An emerging area of scholarship can be found at the nexus between entrepreneurship and community development. Beyond a mere focus on firms and their contributions, this growing nexus in the literature seeks to understand the complex ways that entrepreneurs benefit their communities, and that communities enhance or inhibit entrepreneurship. This exploration is fundamentally economic, sociological, psychological, strategic, behavioral, and cultural; it should incorporate many contributions of scholars across a wide range of disciplines. This introductory article examines the current state of research at the nexus of community and entrepreneurship, and conceptually positions entrepreneurship as deeply embedded in – and inseparable from – community, social, and economic structures. The article presents community entrepreneurship development as a multidimensional and challenging strategy economically speaking, but one that produces many benefits beyond economic growth. The article discusses both the challenges and benefits of promoting entrepreneurship in the community, presents the articles comprising the special issue, and ends with a call to action and scholarship in this exciting conceptual space.

Introduction to community entrepreneurship development

It is a privilege to present this special issue of Community Development on a topic that, the guest editors believe, deserves ongoing attention in the academic literature: community entrepreneurship development. Entrepreneurship continues to be a popular topic in the academic literature due to a growing fascination with many contributions of entrepreneurs to the broader community and economy. Entrepreneurs are widely considered to be an economic growth engine, catalysts of change and innovation, and often times powerful contributors to the local society (Baumol, Litan, & Schramm, 2007; Schumpeter, 1934). Naturally, community developers are paying increased attention to entrepreneurship because it is widely cited as playing a key role in economic development, job creation, and advances in well-being in capitalist nations (Baumol et al., 2007). Seventy-nine percent of Americans say that entrepreneurs are more important to job creation and the economy than big business, scientists, and the government (Kauffman Foundation, 2009a), and between 1980 and 2005, all net job growth in the United States was due to firms less than five years old (Kauffman Foundation, 2009b). Viewed through this lens, not much has changed since Schumpeter (1934) declared that the entrepreneur is the central player driving economic development.

Research on entrepreneurship fills many academic journals, some of which are dedicated exclusively to entrepreneurship (and more are appearing every few years). A large portion of this literature focuses tightly on the traditional locus of entrepreneurial control: the firm, firm founders, and founders’ strategies and decision-making processes. This focus likely exists for two reasons. One is cultural: the highly individualistic culture of the industrialized West mythicizes, even glorifies, the heroic attempts of entrepreneurs who create value for others using their creativity, resourcefulness, and managerial prowess (Drakopoulou Dodd & Anderson, 2007; Nijkamp, 2003; Schumpeter, 1934). The other is historical: entrepreneurship, as a field of study, never really had a home. Its roots can be found in economics, management, social and behavioral psychology, marketing, and even bits of sociology (Low & MacMillan, 1988). In each field, the entrepreneur is viewed as somewhat of a productive deviant, whose counter-intuitive actions break from established cultural pathways to produce immense value for others. Think of an entrepreneur who leaves a perfectly good job and gets a second mortgage on the family home to produce and market a new carpet cleaning tool. To many, this shirking of stability sounds like frivolous madness, but certainly not to any entrepreneur committed to an idea about which they are passionate. Studies from many fields have been committed to understanding why a few brave individuals take on enormous risks to chase a dream, and why some succeed while others flounder. The failure of each field of study to completely and adequately describe the entrepreneur is well recognized (Davidsson, 2009; Low & MacMillan, 1988), which may be why research on this elusive, diverse economic actor continues to coalesce into a rather confusing, complex pastiche of creative, risk-bearing, venture-launching behaviors.

Only more recently, the link between communities and entrepreneurs has also emerged as a new frontier in entrepreneurship research (Lyons, Alter, Audretsch, & Augustine, 2012). This perspective builds on the scholarship of social scientists observing that culture, local and state policy, social and physical infrastructure, and even the level of social interaction deeply influence entrepreneurial behavior. In fact, the social structure of communities may be a critical antecedent to entrepreneurial action by producing culturally supported relationships for sharing opportunistic information, collaborating for the benefit of the community or region, and creating an ecosystem that supports small businesses (Fortunato & Alter, 2011; Julien, 2007). The idea that economic action is deeply influenced by both society and policy is not a new one (Baumol, 1968; Granovetter, 1985), and there is a wealth of knowledge on the impact of both culture and policy on entrepreneurship rates and entrepreneurial attitudes (see the Global Entrepreneurship Monitor, Amorós & Bosma, 2014, for a major longitudinal example). The idea that culture may have just as profound an impact at the sub-national level – or even at the local level – is an idea that is likely to resonate deeply with scholars of community. The community is where we as humans get our first introduction to human society beyond our own family (Wilkinson, 1991). The impacts of culture within that society can therefore fundamentally shape our perception of reality, what is valued, and what is honorable (Berger & Luckmann, 1966; Dana, 1995; Dana & Dana, 2005). It begs an important question: Can the culture, structure, and institutions of community profoundly impact whether or not entrepreneurship is valued? Can entrepreneurs conversely shape and impact the communities around them, for better or for worse? Perhaps the community is not only the next frontier for entrepreneurship research, as Lyons et al. (2012) suggest. Perhaps entrepreneurship is also an emerging and growing new frontier for community research as well.

If the community is indeed the next frontier of entrepreneurship research (or vice versa), and if entrepreneurs are an important key to healthy and vibrant local communities, then this brings the complicated nexus between the entrepreneur and the community into full view. Complicated, because both the terms “entrepreneur” and “community” have discordant, messy, evolving, and multifaceted definitions across the literature – and even across different academic fields. The link between entrepreneurship and community development is not, therefore, straight forward and linear. Entrepreneurs are a widely diverse group – perhaps as diverse as the businesses that they launch (Davidsson, 2009; Gartner, 1989). One could even say that entrepreneurs are as diverse as communities, and for readers of this journal, the diversity of perspectives on community represented in these pages over the years has been wonderfully immense. For this same reason, it is nearly impossible to isolate entrepreneurs as a type of individual or a set of specific traits found in a person (Davidsson, 2009; Gartner, 1989). If anything, entrepreneurship is a series of behaviors that are bounded, guided, enhanced, and restricted by the social, economic, and environmental context in which entrepreneurs find themselves (Julien, 2007; Shane, 2003).

This brings us to a special nexus in the literature that inspired this special issue: community entrepreneurship development. It is the study of how communities shape entrepreneurial action at the local and regional level through culture, leadership, institutions, policies, histories and narratives, and beliefs about what is possible. It is conversely the study of how entrepreneurs impact their communities – not just by creating jobs and increasing revenue, but by meeting unmet needs, solving local problems inclusively and holistically, resolving uncertainty, reviving the spirit of the past and/or future, giving back to the community: any impact, really, that entrepreneurs can make in order to make life better. This special issue is a call to research and action in entrepreneurship that, we hope, captures the nexus between entrepreneurship and the community in all its glorious messiness. It is an important opportunity to revisit the complex interaction between communities and entrepreneurs in the literature by presenting some of the latest scholarship available in this conceptual space. Most importantly, the guest editors hope that this issue sparks an ongoing discussion that pushes the boundaries of traditional entrepreneurship scholarship, leading to new theories grounded in understandings that span the Community Development Society family. The special issue thus embraces research from a wide variety of conceptual backgrounds, and also varied methodological traditions, including qualitative, quantitative, mixed method, and robust case study approaches.

This introductory article next attempts to illuminate the conceptual nexus between the entrepreneur and the community in the literature. Two important questions will be explored. Do communities catalyze growth, development, or both? Are communities supporting or leading players in cultivating entrepreneurial action? The examination of these two questions provides insights into the complex relationship between entrepreneurs and their surrounding community – with clues about how entrepreneurship can be supported more effectively at the local and regional level. The article ends by examining several of the benefits of entrepreneurship development beyond economic development, and focusing on how entrepreneurship can be a catalyst for improving overall community well-being. Finally, the outline of the special issue is presented, and the guest editors call readers of this special issue to action and scholarship following this important and multidimensional discussion.

Entrepreneurs and the community

Before delving into the contents of the special issue, a bit of background is warranted. Entrepreneurship can be a deceptively simple topic. A favorite community engagement exercise of the guest editors is to ask a room of community members to raise their hand if they know what the term “entrepreneurship” means. Nearly every hand shoots up. Then, participants are asked to write down their definition of entrepreneurship, and pass it to the front to be read aloud. Naturally, the answers are wonderfully – even hilariously – diverse, and of course they would be! Entrepreneurship is a concept that most people grasp viscerally, but who is an entrepreneur, really? Is entrepreneurship about Silicon Valley-style, high-growth tech businesses? Is it about mom and pop boutique stores? Do entrepreneurs have to be in the community to have an impact? What about someone who launches a “non-business,” like a new club or program that serves the public good? How about entrepreneurial thinkers in existing organizations, or people in governments and nonprofits that launch new projects? All of these ideas are likely to appear, sometimes putting famous entrepreneurs like Mark Zuckerberg of Facebook at the same entrepreneur’s cocktail party as Cynthia from Cynthia’s Lawn Care in rural Missouri. How can we talk about entrepreneurship development when so many people have a different idea of what the target of that development should be? This can lead to some interesting discussion and even conflict, as some community members may value some types of entrepreneurship over others (“we should be focusing on high growth business, not little dinky mom and pops”). Or conversely, what some community members consider entrepreneurial may not seem very innovative at all (“what we really need in this town are healthier school lunches”).

Behind this diversity are different social and cultural values about who entrepreneurs are and how they are supposed to behave. If one sees entrepreneurs as a critical engine for economic growth above all other things, a focus on supporting small, existing businesses might seem like a waste of time and money. To others, if simply expanding the entrepreneurial mindset of current residents is an important goal, empowering local residents with knowledge about how to solve local problems and “launch new stuff,” then education and mentorship should be central. A focus on growth-oriented entrepreneurship may even seem completely out of line. The financial and institutional supports necessary for supporting an emerging biotech sector (skilled labor, high-tech facilities, links to research institutions) are vastly different from those supporting a new community supported agriculture initiative (latent demand, available land, organic agriculture knowledge) or a new river walk district (available real estate with frontage, shoreline improvements, retail consulting, a river). Merely supporting entrepreneurship as an economic development tool can lead to a great deal of local conflict, as the varied expectations of the underlying term can lead to confusion and disappointment about who gets supported, and what the outcome should be.

In our observations, there are two common narratives that appear regularly in both the practitioner and academic literature about the link between entrepreneurship and economic development. Each presents an opportunity to examine the nexus between entrepreneurs and communities through a different lens.

Are entrepreneurs catalysts of growth, development, or both?

One common narrative found in the economic development literature is the idea that entrepreneurship is being rediscovered as a way to catalyze economic and employment growth and wealth creation (Acs, 2006; Baumol et al., 2007; Wennekers & Thurik, 1999). This narrative has emerged as industrial recruitment is increasingly viewed as a lackluster strategy – one that is unlikely for many rural and economically troubled communities (Mayer & Knox, 2006; Turner, 2003). It is easy to view entrepreneurs as economic heroes who can create massive value, even in the depths of a recession (Fairlie, 2013; Shane, 2011). In an economic climate where industrial recruitment is increasingly viewed as a failing strategy, who would not want to capture the creative growth potential of entrepreneurs within their own community? It is a promising narrative, but as we will argue shortly, it is an incomplete one.

In times of high economic uncertainty, and with the continued influx of capital, resources, and talent into high growth areas, many communities struggle to reinvent themselves. There is high pressure to attract new strategies for job creation that do not rely on outdated methods of industrial recruitment. Simultaneously, much of the literature focuses on what makes firms successful, rather than what makes communities successful. And, it is increasingly clear that high-tech, high-growth strategies that work in Silicon Valley, CA are not appropriate for many communities, with the exception of a few knowledge- and capital-intensive metropolitan areas (see Fortunato, 2014 for a fuller argument of this point). There continues to be a need to explore what entrepreneurship development can really do for communities beyond the traditional focus on economic growth: from enriching the local lifestyle to building self-sufficiency; from attracting new markets to rediscovering traditional work; from the highest tech enterprises to the most ancient crafts and trades.

Entrepreneurship as a development strategy is neither as easy nor as successful as it appears on the surface – and the biggest and best returns on this strategy often have nothing to do with traditional growth. Entrepreneurs are largely responsible for job growth in the aggregate (Kauffman Foundation, 2009b), but this does not mean that all entrepreneurs are equally successful, or have an equivalent impact on local society. Research has concluded that most high-growth entrepreneurship tends to be clustered around urban areas (Acs & Armington, 2006) or around major research institutions (Audretsch & Lehmann, 2005). Growth-oriented firms are not only spatially concentrated in some places (and virtually absent from others) (Acs & Mueller, 2008), overall, only a very small percentage of firms create enough jobs to have a major impact on economic development that could rival industrial recruitm...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Contents
• Citation Information
• Notes on Contributors
• 1 Community entrepreneurship development: an introduction
• 2 Entrepreneurship and community development: what matters and why?
• 3 Rural economic development under devolution: A test of local strategies
• 4 Complex transactions: Community development financial institutions lending to ethnic entrepreneurs in Los Angeles
• 5 Invisible struggles: the representation of ethnic entrepreneurship in US newspapers
• 6 Constructing a multi-dimensional measure of local entrepreneurial culture
• 7 Government and the entrepreneurial ecology: The case of Halifax, Nova Scotia
• 8 Creating and sustaining a model of community-based enterprise learning: a participatory case study of ready hubs
• 9 Creating entrepreneurial communities: building community capacity for ecosystem development
• Index