Academic journal article American Journal of Entrepreneurship

An Institutional Perspective of Rural Entrepreneurship

Academic journal article American Journal of Entrepreneurship

An Institutional Perspective of Rural Entrepreneurship

Article excerpt


Over the past decade, entrepreneurship has become recognized as a legitimate and distinct regional development approach, one that is increasingly considered a primary component of state and regional economic development efforts. Entrepreneurship is the term frequently used to refer to the rapid growth of new and innovative businesses and is associated with individuals who create or seize business opportunities and pursue them without regard for resources under their control (Kayne, 1999). As a result, many states now have a variety of entrepreneurial initiatives, networks, and centers to promote this development strategy (NGA, 2004; Williams, 2004). One ongoing area of concern is that local development practitioners may view entrepreneurship strategies as too difficult or out of reach for their community. Furthermore, there is increasing confirmation that many communities, especially small and rural communities, continue to engage in traditional economic development practices even in the face of mounting evidence that these approaches may not provide the benefits that communities believe they do (Chi, 1997; ICMA, 2004).

The field of regional economic development, and the policy landscape associated with it, has undergone a number of transitions over the past several decades. Economic development policies of the past focused almost exclusively on industrial recruitment and, to some extent, business retention. As evidence continues to mount regarding the characteristics of successful communities and related development, it has become increasingly clear that a one-size-fits-all development strategy is not a sustainable or wise development approach for most communities and regions. It has also become evident that a mixed basket of development strategies that includes business recruitment, business retention, and entrepreneurship is preferable for sustainable economic growth in most communities.

This article begins by placing the practice of rural entrepreneurial development in a wider historical and theoretical context. There is a diverse literature on factors relating to successful entrepreneurs and to some extent on the success of entrepreneurs within regions (Silicon Valley, Northern Virginia's High-tech corridor and others). Only recently, however, has more attention focused on the importance of diverse institutions and institutional networks in shaping local entrepreneurial success. Similarly, there is a gap in the research on rural entrepreneurship and related entrepreneurial development. This paper begins with a review of literature regarding the value of institutions and institutional networks in developing and supporting local entrepreneurship. This literature provides critical insight into the public policy environment surrounding rural entrepreneurship and efforts at local entrepreneurial development. The next section presents an example of a federal policy initiative working to support rural entrepreneurship through state institutions across the Black Belt of the Southeastern United States. Finally, the results of a state level entrepreneurial and economic development survey are discussed. These results characterize the kinds of institutional and policy barriers that rural communities may face in implementing entrepreneurial development policy. This paper concludes with thoughts for future research and insight on the importance of the wider institutional and policy framework that entrepreneurship occurs within.

Entrepreneurship and rural development

From the mid-nineteenth to the early twentieth century, the United States developed a set of rural and agricultural institutions designed to improve productivity and welfare of farm people (Freshwater 2000). Although little or no attention was devoted to entrepreneurship and non-farm institutions per se, government invested in the basic infrastructure of agriculture by developing institutions and programs that provided rural roads, common market standards for farm products, and free mail delivery in rural areas. …

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