Volume 2, Issue 1 - Entrepreneurship and Community

Guest Editor, Thomas S. Lyons, Baruch College, NY, USA in conjunction with the ERJ Co-Editors and a Special Issue Executive Committee consisting of David Audretsch at Indiana University, Theodore R. Alter at Pennsylvania State University, and Darline Augustine at Baruch College. This ERJ Special Issue is devoted to the premise that communities are a vital part of entrepreneurship research as well as practice. In the lead article, the Executive Committee including Theodore R. Alter, David Audretsch and Darline Augustine, along with Thomas S. Lyons as ERJ Guest Editor, document the literature to date and the many facets of the relationship between entrepreneurship and the community. These scholars remind us that entrepreneurship does not take place in a vacuum and that there is, and should be, a symbiotic relationship between these two human constructs. The four competitive research articles in this special issue represent a diversity of perspectives on and approaches to entrepreneurship and community. Both rural and urban perspectives are presented; quantitative and qualitative methodologies are employed; the venues of exploration are international; and the lenses of business development, community development, economics, entrepreneurship, geography, public policy, and rural sociology are applied. These articles contribute to our understanding of the entrepreneurship-community nexus and to the literature of entrepreneurship through: (1) examining the role of entrepreneurship in addressing urban poverty; (2) exploring how entrepreneurship manifests itself in recessionary times; (3) studying the impact of community culture on entrepreneurship and vice versa; and (4) explaining the function of networking in creating entrepreneurial communities.

In this article, the authors examine the existing literature addressing the relationship between entrepreneurship and the community and conclude that this is an important, yet relatively neglected, topic. The article begins by defining the terms “community,” “entrepreneurship,” and the nexus of the two: “community development.” It then proceeds to explore what the current literature tells us about the interaction between these elements, touching upon issues of individualism vs. community, social capital building, productive and unproductive interaction, community culture, leadership, community entrepreneurship, and family venturing, among others. The article concludes with a set of observations about the types of research needed to fill gaps in our understanding of this delicate and vital relationship.

The potential of entrepreneurial activity for rejuvenating deprived communities has been recognised by policymakers, especially with regard to reducing unemployment. Utilising data from the Global Entrepreneurship Monitor (GEM) in conjunction with the Welsh Index of Multiple Deprivation (WIMD), this study examines the relationship between early stage entrepreneurial activity and entrepreneurial attitudes and attributes, with the different domains of deprivation. It is found that those living in the more deprived urban areas of Wales have a much lower level of entrepreneurial activity. Most domains of deprivation have a negative influence on entrepreneurship, although a lack of services has a positive effect and makes individuals more likely to start a business without the requirement for an existing business community. However, the environment influence disappears as more individual characteristics are accounted for. This implies that whilst entrepreneurship is lower in deprived urban areas, the primary reason for this is the characteristics of those living in these areas, rather than any environmental effects. Controlling for the choice of location, an environmental effect is found to exist, negatively influencing entrepreneurial social capital. This casts doubt on the potential for enterprise to alleviate the deprivation of an area if success is likely to result in out-migration.

Economic recessions increase costs, risk, stress, uncertainty, and business failures while decreasing the availability of employment. Individuals who seek to become self-employed in recessionary times, whether out of need or for opportunity reasons, face difficult and unique circumstances. We use cross-section repeated-measures rare events logistic regression to model the effects that living in rural America and changes in the economy have on the probability of individuals engaging in necessity or opportunity entrepreneurial activities both before the recession (2005–2007) and during the recession (2008–2010). Key findings indicate that before the recession, individuals living in rural metro and nonmetro counties were more likely to engage in opportunity-driven entrepreneurial activities when compared to individuals living in more urban counties. Positive employment growth rates before the recession also increased the probability that individuals in rural areas would engage in opportunity entrepreneurship. The recession marked a shift in the motivation of individuals in rural America to become self-employed. There is a clear decline in opportunity entrepreneurship and an increase in necessity entrepreneurship. In all rural and mixed-rural counties, college education positively predicts opportunity entrepreneurship, whereas individuals with incomes below $50,000 or working in a part-time job are more likely to engage in entrepreneurship driven by need.

Cultural factors are often absent from analyses of economic change and development, divorcing the nature of social places from the economic spaces within which they are situated. However, the cultural community traits of places may influence the prevailing entrepreneurial culture of these places in the form, for example, of entrepreneurial capacity. As a means of examining the missing link between placed-based community and economy, this study establishes a number of community culture measures and assesses how these are associated with place-based measures of entrepreneurship. The study finds significant links between community culture and attitudes to entrepreneurship at the local level. For instance, it is found that caring and more feminine attitudes and activities are negatively associated with stronger local entrepreneurial cultures. Observance of social rules, social cohesion and embracement of work and education, on the other hand, are positively associated with stronger, more enterprising business cultures, suggesting that a cohesive community increases the entrepreneurial confidence of individuals. It is concluded that community cultural characteristics such as social cohesion represent a potential strength which policymakers can potentially enhance as an economic development tool to stimulate entrepreneurship.

In an attempt to understand more about community-level variation in entrepreneurship, this research article focuses on two possible sources of variation within the local society: the amount of interaction among entrepreneurs, and between entrepreneurs and local institutions; and the purposive nature of these interactions. Theories about social interaction, such as Granovetter’s (1973) theory of weak ties and Burt’s (1995) theory of structural holes, are used to understand how large, diverse networks may impact not only information exchange, but information and skills necessary for entrepreneurship. Also, Wilkinson’s (1991) interactional field theory is presented as a way to understand how not only network ties, but the content that flows over those ties in the form of a common community purpose, can equally structure behavior around entrepreneurship. Hypotheses are generated from these social theories and tested empirically using a six-community case study involving both entrepreneurs and institutional actors/representatives in both high- and low-entrepreneurship communities. Interaction and purpose are examined to understand how these may differ across communities with different levels of entrepreneurship. The implications of the findings for entrepreneurship development at the community level is discussed, with a focus on how entrepreneurship can be supported more effectively, quickly, and inexpensively using the community's interactive capacity.