Rural Cooperation in Europe

In Search of the 'Relational Rurals'

Edward Kasabov

• Publisher: Palgrave Macmillan
• Year: 2015
• Print ISBN: 9781137348883
• eBook ISBN: 9781137348890
• Topic: Social Sciences
• Subtopic: Management
• Index: Social Sciences

This collection analyses various European rural locations through a relational lens, attending to key aspects and dimensions of the 'relational rurals' such as cooperation, contestation, solidarity and consensus. By observing rural settings in such terms, contributors are able to rethink European rurality from a distinctly relational perspective.

Part I

Cooperation in Rural and Peripheral Areas: Conceptual Issues, Approaches, and Challenges

1

The Character of Rural Business Relations

Robert Newbery and Gary Bosworth

1.1 Introduction

Rural spaces are often associated with strong community ties (Reimer, 1997; Atterton and Bosworth 2012) but the simultaneous spread of information technology and advances in personal mobility in the ‘Network Society’ (Castells, 2005) have stretched the geography of many rural networks and relations. In this context, this opening chapter considers the role of rural businesses as essential nodes in rural networks and the value that network relations can bring to smaller, rural enterprises.

Entrepreneurs and business owners cannot function in isolation, leading to a presumption that rural economies are disadvantaged by their sparser networks. Business-to-business cooperation is commonly regarded as vital to knowledge transfer, the discovery and exploitation of ideas, and higher levels of innovation. The literature on industrial networks and business clusters is replete with evidence of how differential access to physical, human and social resources provides greater local, regional, and/or national productivity.

While rural areas may offer some natural barriers to network-formation, we suggest that the stronger social mechanisms associated with rural communities – classically articulated by Tonnies (1955) – act as a foundation or template for building and consolidating social ties. These may not entirely compensate for the challenges of sparseness and distance but we explore the distinctiveness of rural business relations and the consequent value to business owners.

Using evidence from the literature and our independent studies of small businesses in Northern England, this discussion will initially explore the theory of relationships, incorporating social networks and conceptions of trust. This leads to questions regarding what the business relations are for, who engages in them and how they change over time. We also comment on the diverse origins of relations that contribute to local business development in rural areas.

1.2 Rural business relations

Business relations or relationships have been defined in numerous ways but for the purposes of this chapter, we apply the framework set out by Tiepoh and Reimer (2004, p. 430). They establish four fundamental modes of social relations as set out in Table 1.1.

Given our focus on business-to-business cooperation, we are most interested in market and associative relations. Market relations may occur daily as part of the normal operation of a business, such as with a supplier or customer, or more infrequently. They may be purely transactional or may encompass greater degrees of social engagement. For day-to-day operations, relationships revolve around explaining efficiencies and competitiveness. A classic example is the research of Piore and Sabel (1984) into Italian industrial districts. Here flexible specialisation, technology sharing, and subcontracting arrangements, occurring within a focused geography, were highlighted as small and medium size enterprises (SME) characteristics that optimised operations.

In keeping with associative relations, these relationships may also be created over and above those encountered in the day-to-day running of a firm and are intentionally held for some common purpose, such as a purposive or ‘consciously constituted’ (Huggins, 1998, p. 147) collection of firms. Here research is typically related to inter-firm and policy-implanted networks (Huggins, 2000) and evaluation is based on targeted, usually quantifiable, outcomes. Within the small business literature, a host of advantages have been attributed to ‘networks’, including the motivation of entrepreneurship among network members (Copus and Skura, 2006), time and money saved in information gathering (Malecki and Oinas, 1999), support for nascent small business, innovation (Camagni, 1991; Gelsing, 1992), access to training (Bennett and Errington, 1995), and providing a firm ‘with its “distinctive capabilities” that help it to create and add value’ (Malecki, 1997, p. 173). Totterman and Sten (2005) found that formal support groups can also facilitate access to other business networks, seemingly implying that cumulative benefits can accrue from network participation. Uzzi (1996) also mentioned the long-term advantages of reciprocation demonstrating that the value of networks can increase over time.

Table 1.1 A typology of social relations

Type of relation	Explanation
Market relations	– Based on the exchange of goods and services within a relatively free and information-rich context
	– Tend to be short-term and based on the neo-classical assumption of economic behaviour
Bureaucratic relations	– Impersonal and formal relationships based on a rationalised division of labour, authority structures, and regulation
Associative relations	– Typically informal, voluntary, and surround shared interests
Communal relations	– Typically family and close friendships

Source: Adapted from Tiepoh and Reimer (2004).

These relations share commonalities, and where successful industrial districts have been explained by the implicit relations within supply chains (Piore and Sabel, 1984), new networks have been set up with the explicit intention of emulating their successes (Rosenfeld, 1996). Purposive collectives may be set up by the local business community to solve a collective action problem, or to provide competitive access to services otherwise unavailable to members. Huggins (2000) suggests that these networks are popular with policy makers as a blueprint for development. One form of ‘consciously constituted’ network of particular interest here is the business association, where the member ‘nodes’ are businesses cooperating to achieve private interests and collective goals.

Social network approaches consider the social context of relations as critical in determining the extent, distribution and value of benefits to members. As part of his theory of embeddedness, Granovetter (1985) argues that actors should not be under- or over-socialised. By understanding that the economic behaviour of an agent is embedded in ongoing networks of social relations, both the economic and social fields are given relevance. Dynamic social relations can create bonds of trust and order between individuals and these ties bind individuals into relationships and social structures such as groups and associations. Granovetter suggests that the strength of social ties is a function of reciprocity, intimacy, intensity of emotion, and time (1973).

Coleman (1988) suggested that close social networks, where actors are densely connected to one another, allow for the continuous reinforcement of trust and of group norms, resulting in strengthening ties and group solidarity. Connections built up through trust and reciprocity may provide benefits such as improved reputation and ‘thicker information’ (Uzzi, 1996, p. 667) and may indirectly lead to economic benefits. These close social networks are more likely in day-to-day business operations and may overlap with wider community-based networks, especially in rural areas where embeddedness may be stronger (Reimer, 1997; Atterton, 2007). Communal relations may also support entrepreneurs at different stages of business creation and development, which can be explored through the concept of embeddedness.

Embeddedness can contribute to the success or failure of a business as a result of the social ties built up within a community. The strong and weak ties thesis (Granovetter, 1973) argues that whilst strong ties within a community may lead to solidarity and strong community spirit, they may also insulate the community from external influences, leading to atrophy. These ‘lock-in’ effects are detrimental to innovation and learning (Uzzi, 1996) and may isolate businesses from regional, national and global opportunities (Oinas, 1997). Moral obligations and peer pressure may override beneficial economic considerations, with preference given to embedded local ties over arms length links (Atterton, 2007) and a limited receptivity to new ideas. Indeed, failure to conform to the community norm can damage reputations and result in isolation from a network (Jack and Anderson, 2002). This relates to Olson’s privileged and intermediary groups (1971), where to risk free-riding behaviour in a group with strong bonds would be to risk weakening these ties and becoming socially censured or excluded from the group.

However a foundation of trust is required between parties. Simmel (1971) defines trust as the most important condition in facilitating cooperation and social exchange, suggesting that

without the general trust that people have in each other, society itself would disintegrate, for very few relationships are based entirely upon what is known with certainty about another person, and very few relationships would endure if trust were not as strong as, or stronger than, rational proof and personal observation.

(Simmel, 1978, pp. 178–79)

Elster (1989) identifies two notions of trust: generalised and cooperative. Generalised trust is ‘characterized by the predictability of social life and ... maintained by the existence of habitual rules and social norms’ (Misztal, 1996, p. 63). Cooperative trust on the other hand is specific to relationships and indicates the trust which ‘coordinates expectations’ between actors (Elster, 1989, p. 97). The social expectations for what constitute legitimate behaviour (Abercrombie et al., 2000) originate in ethnic, racial, class, and other cultural differences (Baland and Platteau, 1996). Thus the social norms characterising ‘generalised trust’ may differ between cultures and regions. Atterton (2007) found in a study of small Scottish towns that differences in the social networks of small business could in part be explained by the different cultural characteristics of local people and by the number of in-migrants in the area who took time to assimilate but, once assimilated, changed the dynamics of social networks (see also Young, 2010).

Cooperative trust is key to notions of embeddedness where it provides the mechanism for a social logic of exchange that is more efficient than impersonal economic transactions. Close ties within social networks allow for reinforcement of both cooperative and generalised trust (Coleman, 1988). Greater solidarity between actors, shared norms and higher levels of trust may be related to higher degrees of homogeneity. Thus, in applying Tiepoh and Reimer’s framework for analysing rural business relations, the underlying trust must also be considered as an influencing factor for the outcomes that might be observed.

There remains a gap in knowledge regarding the geography, sociology, and dynamic of these rural business relationships. The following section outlines two complementary studies into rural business relations. Using our joint findings, we follow this with a discussion of where these rural business relationships appear to be taking place, the participants in these relationships, and how these connections change over critical stages of business development. Finally, we conclude by summarising our evidence to highlight what we believe to be the rural character of business relations.

1.3 The empirical research of rural business

The subsequent analysis is based on two parallel investigations into rural SMEs and microenterprises in the North East of England (Bosworth, 2009a) and rural business associations across Northumberland and Cumbria (Newbery, 2010). The first applied a sampling frame of 40 businesses, comprising a mix of indigenous and in-migrant business owners across four broad sectors: retail; tourism and hospitality; manufacturing and distribution; and professional services. In-migrants were defined as having moved at least 30 miles as adults, and it should also be noted that the sample was intentionally skewed towards smaller rural settlements to maintain the focus on those rural areas where business networks might be most challenging to initiate and sustain.

A critical incident technique was used to analyse the significance of numerous interactions. This enabled the type of contact and the value for the business to be examined for every incident where another individual or organisation had an impact upon the business. As Curran and Blackburn recognise, this technique can expose ‘the character and content of the linkages between small business owners and others within the social and economic community’ (1994, p. 106). Some 380 critical moments were identified from the 40 interviews and these were categorised according to the locality and the source of each contact, the strength of relationship and the impact on the business. Thematic analysis of transcripts provided data lending itself to a degree of statistical analysis, although it remains a predominantly qualitative technique and as such is supplemented with more detailed examples of how these moments occurred and created value for the businesses concerned.

The second encompasses a members survey, interviews and participant observation from 15 rural business associations, ranging from small single sector to larger mixed sector associations. These captured benefits sought and achieved and yielded a response rate of 37% with 313 respondents. The data was...

Table of contents

• Cover
• Title
• Copyright
• Contents
• List of Figures and Tables
• Preface
• Acknowledgements
• Notes on Contributors
• Introduction: Exploring the Rural through a Relational Lens
• Part I Cooperation in Rural and Peripheral Areas: Conceptual Issues, Approaches, and Challenges
• Part II Challenges to the Rural Idyll: Politics, Class Divisions, and Conflict
• Part III Policy Intervention, Solutions, and Lessons for Managing Rural and Peripheral Areas
• Part IV Taking Further the Intellectual Debates on Rurality
• Index