Academic journal article Academy of Entrepreneurship Journal

Business Location Relates to Learning Experience of the New Venture Creation-Rural versus Urban Entrepreneurs

Academic journal article Academy of Entrepreneurship Journal

Business Location Relates to Learning Experience of the New Venture Creation-Rural versus Urban Entrepreneurs

Article excerpt

ABSTRACT

This paper reports the preliminary results of an on-going national study of small businesses to determine the impact of entrepreneurial decisions on rural and urban entrepreneurs, their spouses, and their children. One hundred and thirty-five retail and service business owners responded to questions regarding their expectations and realities of new venture creation related to the financial situation, business process, and family relationships from the entrepreneurs' perception. Rural and urban entrepreneurs in the sample showed similar demographic profiles. Both rural and urban entrepreneurs revealed consistent expectations as well as reality checks regarding financial improvement, personal satisfaction, and family happiness. However more urban entrepreneurs experienced significant changes in their marriage relationship after starting the businesses. Rural entrepreneurs seemed to be less optimistic before and after starting their businesses compared to urban entrepreneurs. Implications related to entrepreneurial decisions and different learning experiences when entrepreneurs consider starting again are also discussed.

INTRODUCTION

Evidence revealed by numerous researchers has shown that small businesses play a key role in improving the welfare and quality of life for both urban and rural residents around the world. According to the definition of the US Census (www.census.gov/prod/2001pubs/mso-01icdp.pdf), an "urban area" includes urbanized areas and other urban entities that consist of densely settled territory with a population of 50,000 or more inhabitants. The rest of the areas are "rural". Through conversations with experts in Small Business Development Centers and other institutions, there seem to be clusters of small businesses distributed unevenly between rural and urban areas. Early Marxian and Weberian theories discussed that independent entrepreneurs were one of the four social classes represented different legacies in rural economic development, became the backbone in rural communities, and wealth was generally accumulated to acquire or develop an independent business (Flora & Flora, 2004). However entrepreneurs in rural regions seemed to face different challenges than urban entrepreneurs. For example, Counsel for Advocacy Jere W. Glover presented three major points regarding rural small businesses--small businesses in rural areas seemed to have more difficulties in financing, small businesses had higher risks to for financial support from local small banks when banks merged, and the small size of rural businesses and the lack of competition from other banks increased the costs to borrowers (US Small Business Administration, 2001).

Previous literature covered a wide variety of entrepreneurship theories that described general strategies, processes, and reactions to new venture creation (e.g. Timmons, 1999; Bygrave & Hofer, 1991; Bygrave, 1989; Moore, 1986; Carland & Carland, 2000), yet there has been limited information regarding business location and its interactions with the decisions and outcomes of new venture creation. Here "business location" refers to the region where the business is, not the specific business site. Entrepreneurship is as important in rural areas as in urban areas in terms of economic development and contribution. Although the general strategies or processes would apply to any new venture creation, it is not clear whether rural entrepreneurs evaluate new venture opportunities and their impact on family relationships different from urban entrepreneurs. One would wonder: What are the differences between rural entrepreneurs and urban entrepreneurs in their demographics? Do they have similar expectations in business objectives and family welfare? Do they have a similar learning experience (either positive or negative) after running the business? How do their family members assess the new venture and its impact on family relationships? …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.