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It Takes a Village to Support Entrepreneurship: Intersecting Economic and Community Dynamics in Small Town Entrepreneurial Ecosystems

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Despite the ubiquity of small towns, the forces shaping entrepreneurship in cities of limited size, reach, and scope are unexamined. To address the lack of attention to small town entrepreneurship, a comparative-case study of two small towns (Newton
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  “It Takes a Village” to Support Entrepreneurship: Intersecting Economic and Community Dynamics in Small Town Entrepreneurial Ecosystems  Philip T. Roundy* Summerfield Johnston Centennial Scholar UC Foundation Assistant Professor Department of Marketing and Entrepreneurship University of Tennessee at Chattanooga Gary W. Rollins College of Business 615 McCallie Avenue Chattanooga, TN 37403-2598 Tel. 330-206-2458 Fax: 423-425-4158 Email: philip-roundy@utc.edu Roundy, P. T. “It takes a village” to support entrepreneurship: Intersecting economic and community dynamics in small town entrepreneurial ecosystems,  International  Entrepreneurship and Management Journal, forthcoming, https://doi.org/10.1007/s11365-018-0537- https://link.springer.com/article/10.1007/s11365-018-0537-0#citeas     “It Takes a Village” to Support Entrepreneurship: Intersecting Economic and Community Dynamics in Small Town Entrepreneurial Ecosystems  ABSTRACT Despite the ubiquity of small towns, the forces shaping entrepreneurship in cities of limited size, reach, and scope are unexamined. To address the lack of attention to small town entrepreneurship, a comparative-case study of two small towns (Newton Falls, Ohio and Geneva, Ohio) was conducted. The study examines how and to what extent entrepreneurial activity manifests in small towns and identifies the strategies and contextual forces that promote and hinder small town entrepreneurship. Findings reveal (a) a variety of entrepreneurial activities occur in small towns, (b) community members engage in market and community-based strategies to encourage entrepreneurship, and (c) there is an ecosystem of economic and community dynamics that spur and discourage entrepreneurial activity. The findings contribute to research on entrepreneurship and economic development in small towns and generate practical implications for policymakers and entrepreneurs.   INTRODUCTION Entrepreneurship, the creation, recognition, and pursuit of innovative opportunities to create value, is increasingly recognized as a mechanism for economic and community advancement (Acs 2006; Nissan et al. 2011; Seelos and Mair 2005; Shane and Venkataraman 2000). Productive entrepreneurial activity, including the creation of new organizations, community initiatives, products, and markets, is a source of job creation (Malchow-Møller et al. 2011), technological innovation (Acs and Audretsch 2005), and financial independence (Stevenson 1986), which can improve standards of living and result in changes to the cultural status quo (Baumol 1996; Carter 2011; Rindova et al 2009). In pursuit of the beneficial outcomes of entrepreneurship, governments and economic development organizations are increasingly enacting policies aimed at stimulating entrepreneurial activity (Karides 2005). A focus of policy-makers during the past decade is the promotion of “entrepreneurial ecosystems” (EEs): the inter-related forces that promote and sustain regional entrepreneurship (Hechavarria and Ingram 2014; Neck et al. 2004; Nylund and Cohen, 2017; Roundy, Bradshaw, and Brockman 2018; Spigel 2017; Stam 2015). The focus on systems of inter-connected forces stems from viewing entrepreneurship as a socially-embedded, relational activity that depends on a complex set of stakeholders, cultural values, institutions, and infrastructure (Thornton 1999; Welter 2011). Entrepreneurial activity does not take place in a social or cultural vacuum (Smith and Stevens 2010). Scholars are increasingly acknowledging that beyond the characteristics of the entrepreneur, such as their alertness to new opportunities (cf. Roundy, Harrison, Khavul, Perez-Nordtvedt, and McGee 2018), entrepreneurship is a function of the context in which it occurs (Sorenson and Audia 2000). In fact, “t here is growing recognition […]  that economic behavior can be better understood within its historical, temporal, institutional, spatial, and  social contexts, as these contexts provide individuals with opportunities and set boundaries for their actions ” (Welter 2011: 165). For instance, entrepreneurship is location-specific; where  entrepreneurship takes place matters for both the entrepreneurship process and its outcomes (Welter 2011). Part of what determines entrepreneurs’ success and  their access to investors, human capital, and other resources, is their geographic context (Steyaert and Katz 2004). Geography includes socio-spatial distinctions, such as whether young companies are being created in high-income nations, emerging markets, large metropolises, or small towns (Welter 2011). Despite growing attention to geographic forces and the place-based factors that shape entrepreneurship (e.g., Welter et al. 2008), research on entrepreneurial ecosystems focuses almost exclusively on a single context: established entrepreneurial communities in large cities. Small cities, however, are prevalent across the globe with nearly half of the world’s  urban population  –   across high-income and developing nations  –   living in small towns (Bell and Jayne 2009). The prevalence of small cities and their economic and cultural impact are growing because of the rapid urbanization of rural areas (Bell and Jayne 2009). Small towns serve as “connections between the dispersed agricultural populations and the agglomerated [large] urban populations” (Stafford 1963). In the United States,  for instance, an estimated 50 million people now reside in small towns (Couch 2016). In Europe, small cities represent between one-fifth and one-third of the population and, in regions of Scotland, Scandinavia, and Italy, half of the population lives in small towns (Knox and Mayer 2013). There are important implications to these trends because small town residents often face unique issues, such as “brain drain” (i.e., the outmigration of human capital; Alston 2004) , limited resources (Roundy 2017a) and the “everyone knows everyone” inter  -personal dynamic (Kilkenny et al. 1999). Because of globalization and de-industrialization, many small towns are also contexts  “scarred by economic decline [...] leading to a spatial form of inequalities that can be described as ‘peripheralisation’” (Gibb and Nel 2007; Wirth et al. 2016: 62).  The entrepreneurial activities that take place in small towns, which are outside large, commonly studied entrepreneurial hubs such as Silicon Valley, California (Kenney and Von Burg 1999) and Edinburgh, Scotland (Spigel 2016), receive very little academic interest. The lack of attention to entrepreneurship in small towns represents an important omission in the study of entrepreneurship because, even though small cities are unlikely to have “full - fledged” entrepreneurial ecosystems on par with those in large u rban centers, such as Boston, Massachusetts (Saxenian 1996) or Tel Aviv, Israel (Haour 2005), entrepreneurial activity does  occur in small towns and this activity is presumably the result of a unique collection of entrepreneurial forces (Roundy 2017a). Moreover, the forces that operate in small town contexts likely represent both assets and liabilities to entrepreneurial activity (Welter 2011). However, it is not clear exactly how small town entrepreneurial ecosystems function despite not having the same ecosystem of resources, connections, infrastructure, and population density that are key components of large-city entrepreneurial ecosystems (cf. Isenberg 2010). More specifically, the following research questions remain unaddressed:  How, and to what extent, does entrepreneurial activity manifest in small towns? What are the strategies used to encourage small town entrepreneurial activities? And, what are the forces that promote and/or hinder these strategies? To address these questions and the lack of research on small town entrepreneurial activities, an inductive study of two small towns in the Midwestern United States  –   Newton Falls, Ohio and Geneva, Ohio  –   was conducted. The comparative case method was selected because of the lack of prior research on small town entrepreneurial ecosystems, the numerous perspectives needed to tease apart the processes and dynamics, and the large amount of archival material available for the small towns examined (Eisenhardt, 1989; Rojas 2010;
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