Entrepreneurship as a Rural Development Strategy:
Emerging Policy Framework for Maine Maine Rural Development Council

By Robert P. Ho and Patricia Kontur

Entrepreneurs organize and grow new businesses and play an important role in rural development, a fact often overlooked in the public policy arena. The challenge facing Maine is the development of policies that promote entrepreneurship, defined as the rapid growth of new and innovative businesses, and thus foster opportunity and rural economic health. 

Maine has a tradition of rural entrepreneurship that stems from a productive natural resource base and the high value that Maine people place on initiative and independence. However, the same values that make rural communities so attractive can also be impediments to economic development and growth. Since small businesses are so important to job creation and innovation, public policies designed to promote rural economic health need to address these impediments and support rural entrepreneurs. 

Among the challenges to such policies are cultural constraints, community business climate, and limited networking opportunities, technical assistance, and capital availability. In 2000, the Maine Rural Development Council sponsored the Rural Entrepreneurship Initiative (REI) Policy Academies which concluded that a supportive rural development strategy should be based on a commitment to a systemic approach that empowers people and organizations and directly supports individual entrepreneurial efforts. The vision is grounded in values ranging from building vibrant communities and protecting the environment to creating quality jobs. The vision also incorporates tools and resources that are effectively created and mobilized in both the public and private sectors to support the efforts of the individual entrepreneur. 

Specific action steps include understanding the many faces of the Maine entrepreneur, the strengthening of small business counseling and training programs, a statewide assessment of small business services, establishment of improved networking opportunities, and refocusing technical assistance to meet specific needs of the entrepreneur. 

Why Consider Entrepreneurship as Central to a Rural Development Strategy? 

Entrepreneurs organize and grow new businesses in varied circumstances and, consequently, accept risk. More broadly, they have been defined as "essential agents of change who accelerate the generation, application and spread of innovative ideas and in doing so . . . not only ensure efficient use of resources, but also expand the boundaries of economic activities."¹ Inherent in this view are innovation and growth, highly desirable economic qualities that can be put to work for the benefit of rural economies. 

Maine's diverse natural resource base and a culture that values initiative and independence have contributed to a tradition of entrepreneurship. This is reflected in the state's strong home-based business sector. In supporting entrepreneurship, rural Maine communities recognize that many individuals and families make their living from creative uses of natural resources by farming, fishing, and/or logging. 

A single entrepreneur must use multiple talents to survive in a climate that is hindered by distance, sparse population and limited access to public services. It is important for states with substantial rural economies to invest in strategies that create and maintain a competitive advantage. 

A National Governors Association study of entrepreneurial growth in the United States notes that although Fortune 500 companies have lost more than 5 million jobs since 1980, 34 million jobs have been created by entrepreneurs and small business. This report notes that although entrepreneurs usually get their start by forming small business, not all small businesses are entrepreneurial. This distinction often causes state policymakers to direct program benefits into broader economic development policies and initiatives in the expectation that small business support will also support entrepreneurs. This development approach may address a broad range of businesses while virtually ignoring the unique needs of start-up companies with high-growth potential.² 

Maine Context 

"Maine is the third most rural state in the United States, with 55.4% of its population living outside of urban areas. It is the only state in the nation that has become increasingly more rural since 1970. There are 36 persons per square mile in Maine. Only Alaska and the Great Plains have a more sparse population."³ Distance, isolation, and small scale are all factors affecting how rural communities in the state fare economically. These factors can lead to income disparity, chronic unemployment, and out-migration. 

Structural unemployment remains a persistent problem, as Maine's manufacturing economy continues to move south. Textile, leather, and paper firms have all significantly downsized their labor force in the last two decades. Where once rural Maine had the advantage of an abundant labor force and low cost sites for branch plants, today's global economy offers international corporations more for less outside the United States. As raw materials, capital, and technology are all mobile, companies will always look for competitive advantages wherever possible in the global economy.⁴ While some Maine communities have benefited recently from this trend (such as MBNA and EnvisionNet), many pockets of underemployment and poverty remain, particularly in the rim counties⁵ of the state. 

Qualities considered to be positive aspects of rural life such as the pristine natural environment and a slow paced, quiet country lifestyle, are often impediments to economic development. If qualities of "ruralness" are causes of income disparity and social malaise, what can policymakers do to effect substantive economic change and improvement? 

Vision of Maine as an "Entrepreneural State" 

What do the issues and problems discerned through the Maine REI academy process suggest for a vision of the state's entrepreneurial future? Is it a vision of Maine in the 1950s and 1960s — that of “industrial recruitment” reliant on the usual tool boxes of inducements and incentives? Or is it one of our state in the 1970s and 1980s — that of business retention and expansion with little thought for accountability, or closing the gaps between social and economic concerns, or creating linkages within the fragmented service delivery system? 

A vision should take a long view, recognize all the relevant factors, and be grounded in a solid understanding of the root causes of significant problems. It must be compelling and clear in order to help guide policy development. In an era of globalization and rapid change, a vision can not afford to be myopic. 

Emerging from the Maine REI academy process is a refreshing, and perhaps to some provocative, vision of Maine as an "entrepreneurial state." The vision encompasses the essence of what has been called the "Third Wave" approach to economic development that can be stated in three words: "quality, accountability and impact."⁶ The vision of Maine as "an entrepreneurial state" is:

• Committed to addressing the state's development and growth issues systemically;
• Economically empowering on all levels and in all sectors;
• Directly supportive of the individual entrepreneur's efforts, no matter how small and modest. 

The vision formulated by the Maine REI academy participants is forthrightly value laden, for which they should be applauded. It is grounded in values ranging from those of building vibrant communities, protecting the environment and creating quality jobs, to the need for an inclusive and collaborative policy process in support of rural entrepreneurship. Also valued in the Maine vision are networking on all fronts to promote entrepreneurship and long term R&D support. Finally, it calls for concerted efforts to leverage education and economic development policies to help shape the necessary strategies in support of rural entrepreneurship. 

The vision identifies the following characteristics of the entrepreneurial state:

• Guided by a social purpose;
• Performance driven and results oriented;
• At the core of a statewide economic development strategy;
• Supported by the educational system;
• Valuing both tradition and change;
• Well networked both internally and externally;
• Supported by a commitment of research and development resources. 

Maine has the "right stuff" to create a healthy rural economy based on support for entrepreneurs. The result could help all communities and citizens thrive. Such an economy would be closely connected to the emerging new technologies as well as the traditional assets of the state’s rich natural resource base. Achieving these two essential connections calls for a comprehensive policy framework. That framework consists of good information about entrepreneurs, improved technical assistance, reliable networking, entrepreneurial education, encouragement for risk takers and access to capital. 

Policy makers, service providers, educators and researchers as well as small business owners have contributed ideas for a framework that supports entrepreneurship as a rural development policy. To fully develop and implement such a policy requires that we identify specific steps, allocate state budget resources, and charge organizations with tasks to be carried out according to a realistic timetable. Developing such a plan is the business of legislators, non-profit organizations, educators, and business people. We must continue this policy dialogue, build consensus, and strengthen our commitment to the entrepreneurial concepts of collaboration and innovation. 

Endnotes:

1. Reynolds, Paul D., Michael Hay and S. Michael Camp. Global Entrepreneurship Monitor. Babson College, London School of Business & the Kauffman Center for Entrepreneurial Leadership. 1999. 
2. Rubel, Thomas and Scott Palladino. Nurturing Entrepreneurial Growth in State Economies. National Governors' Association. 2000. 
3. Maine Rural Development Council (MRDC). Economic and Social Trends and Conditions in Rural Maine. (A MRDC report prepared by the Maine State Planning Office, Joyce Benson, Senior Planner and Principal Author.) Augusta, Maine, 1996. 
4. Ibid. 
5. Maine State Planning Office designates the following as "rim" counties: Washington, Aroostook, Piscataquis, Somerset, Franklin and Oxford. 
6. Dabson, Brian and William Schweke. "Talking Third Wave," Community Economics Newsletter, University of Wisconsin — Extension Center for Community Economic Development No. 264, October, 1998.

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