Choosing an Entrepreneurial Development System: The Concept and the Challenges

1
Choosing an Entrepreneurial Development
SystemThe Concept and the Challenges

• William L. Smith, Ph.D.
• School of BusinessEmporia State
  Universitysmithwil_at_emporia.edu

2
Abstract

• This paper presents a discussion of the process
  of choosing an entrepreneurial development system
  for a local rural community and region.
• A later version of this paper is in press in
  the International Journal of Management and
  Enterprise Development

3
Entrepreneurship has been defined in a number of
ways over the years

• From Schumpeter 1934 to the Internet of today
  Google gives a page of definitions
• I have adopted the definition of the field of
  entrepreneurship as the scholarly examination of
  how, by whom, and with what effects opportunities
  to create future goods and services are
  discovered, evaluated, and exploited
• From Venkataraman 1997 and Shane and
  Venkataraman 2000

4
In Essence - the field involves

• the study of sources of opportunities
• the processes of discovery, evaluation, and
  exploitation of opportunities, and,
• the set of individuals who discover, evaluate and
  exploit them.

5
Figure 1 Entrepreneurial research framework

• (1) Opportunities, plus
• (2) Individuals, lead to
• (3) Entrepreneurial event

6
Our Goal

• This paper seeks to explore the possibilities of
  creating an entrepreneurial community
  environment in a rural setting within which
  individuals and groups of individuals may develop
  sets of skills which allow them to recognize
  opportunities for entrepreneurial activities that
  did not seem to exist previously.

7
Background

• Foundation support Kauffman and Kellogg
• Government support, Federal and State
• Enterprise Facilitation
• Lichtenstein and Lyons 1996, 2001

8
Seven unique challenges for rural entrepreneurs
Kauffman, 1999, p. 1 of 2

• 1) culture that promotes entrepreneurship
• 2) distance to markets and services
• 3) capital availability and capital-ready deal
  flow
• 4) threshold of demand to justify the location of
  support services
• 5) absence of other entrepreneurs

9
Seven unique challenges for rural entrepreneurs
Kauffman, 1999, p. 2 of 2

• 6) absence of industry clusters
• 7) independent spirit of rural population i.e.,
  balance the entrepreneurial desire to be ones
  own boss with the realization that successful
  entrepreneurs cannot do it alone.

10
Lichtenstein and Lyons 1996, 2001

• The focus of entrepreneurial development should
  be shifted from programs to development of
  individual entrepreneurial skills.
• They proposed a comprehensive needs assessment
  approach,
• To build on each of the existing programs in the
  community, and
• Identify additional training services required

11
The Proposed System

• Expand the population of entrepreneurs, not just
  the right ones.
• Entrepreneurs need continuous assistance with
  many of the skills needed to move through the
  stages of business development.
• This suggests an ongoing mentoring program
  coupled with networking with others who have
  already been through the process themselves.

12
Truly creating an entrepreneurial community.

• Bringing together, in a developmentally focused
  system, persons with entrepreneurial skills at
  various stages of development to share these
  skills
• Persons who help each other develop these skills,
  and
• Persons who will assist others in recognizing new
  opportunities for innovation in the community.

13
Table 1 The four entrepreneurial skill categories
and 17 skill dimensions

• 1) Technical skills Operational the skills
  necessary to produce the product or service
  Supplies/raw materials the skills to obtain
  them, as necessary Office or production space
  the skills to match needs and availability
  Equipment/plant/technology the skills to
  identify and obtain

14
Table 1 The four entrepreneurial skill categories
and 17 skill dimensions

• 2) Managerial skills Management planning,
  organising, supervising, directing, networking
  Marketing/Sales identifying customers,
  distribution channels, supply chain Financial
  managing financial resources, accounting,
  budgeting Legal organisation form, risk
  management, privacy and security
  Administrative people relations, advisory board
  relations Higher-order learning,
  problem-solving

15
Table 1 The four entrepreneurial skill categories
and 17 skill dimensions

• 3) Entrepreneurial skills Business concept
  business plan, presentation skills
  Environmental scanning recognize market gap,
  exploit market opportunity Advisory board and
  networking balance independence with seeking
  assistance

16
Table 1 The four entrepreneurial skill categories
and 17 skill dimensions

• 4) Personal maturity skills Self-Awareness
  ability to reflect and be introspective
  Accountability ability to take responsibility
  for resolving a problem Emotional Coping
  emotional ability to cope with a problem
  Creativity ability to produce a creative
  solution to a problem

17
Volunteer Entrepreneur Corps (VEC) mentoring
program

• A volunteer group to be formed in the community
  (region) who offer their experience to provide
  assistance in their specialties to other
  entrepreneurs, for the betterment of the
  entrepreneurial community.
• Share their experience using a skill with others
  rated medium on that skill.
• Annual volunteer recognition/citations

18
Evaluation (p. 1 of 6)

• Motivation of rural entrepreneurs There is a
  significant difference in motivation between
  rural entrepreneurs and their urban counterparts.
  All the adaptations have been made with this
  issue in mind, and they will be regularly
  reviewed to assure compliance.

19
Evaluation (p. 2 of 6)

• Culture Rural culture has multiple and
  conflicting personalities it is anything goes
  and can do on the one hand, and very
  conservative overtones on the other, that often
  discourage risk-taking and inhibit
  entrepreneurial activity. The networking and
  mentoring process will be built on this
  dichotomy, with continuous attention to making it
  a strength, not a weakness.

20
Evaluation (p. 3 of 6)

• Networks Networks are even more important to
  rural entrepreneurs. In fact, they are essential
  to entrepreneurial success but providing
  adequate forums to share experiences, explore new
  opportunities, and seek reinforcement are the
  biggest challenges to promoting entrepreneurship
  in rural America. Networking is at the heart of
  the proposed system. Providing the correct
  forums, the best mentors, and the most effective
  balance of outside trainers and experienced
  entrepreneurs to provide guidance and skills
  development to less experienced entrepreneurs
  will be critical to success of the system.

21
Evaluation (p. 4 of 6)

• Capital and deal flow There is both a lack of
  equity capital and a lack of capital literacy
  in rural areas. Skills related to understanding
  and obtaining appropriate funding are integral to
  the skills development system proposed. New
  funding sources will be available based on recent
  legislation in the state.

22
Evaluation (p. 5 of 6)

• Workforce Both skilled workers and management
  skills are often miles away. Identifying ways to
  access these skills is a continuing challenge.
  This identification and matching to the benefit
  of area entrepreneurs is the reason for the
  creation of the proposed system. Skills not
  available will be created, brought in, or
  otherwise made available as an integral part of
  the entire entrepreneurial development system
  processes.

23
Evaluation (p. 6 of 6)

• Youth Rural Americas most significant export
  has been its children which are recognized by
  community leaders as among the greatest threats
  to the viability of many rural communities. Rural
  entrepreneurship can address the aging of rural
  communities in two ways
• 1) Discussion with rural youth about the value of
  closeness to their rural hometowns and finding
  ways to allow them to remain.
• 2) Promoting rural communities as attractive to
  youth and young families with a
  pro-entrepreneurship environment.

24
Action Steps, 1 2

• Enhancements of entrepreneurial education at all
  levels are already under way through closely
  coordinated efforts of related programs of the
  university and other educational entities.
• An AgriTourism initiative is being undertaken in
  the region which will provide mutually beneficial
  activities and increased opportunities for
  entrepreneurial tendencies to act upon.

25
Action Steps, 3 4

• Implementation will require wide political and
  social cooperation among a broad spectrum of
  service providers, governmental units, and
  members of the general community.
• Appropriate information sharing and input from
  interested members of the public in general will
  be critical to successful system implementation.

26
Action Steps, 5, 6 7

• Organize the Volunteer Entrepreneur Corps (VEC)
  and begin the networking process
• Create the needs assessment process by
  validating the Skills Sets to be measured and the
  process of measuring them.
• Support the infrastructure to allow this
  systematic process to be sustained over time.

27
Conclusion

• From the conclusion section of Lichtenstein and
  Lyons 2001, a great quote H. L. Mencken once
  said that for every complex problem there is an
  easy answer, and it is wrong. Community-wide
  enterprise development is a complex problem
  therefore, any useful solution is bound to be so
  as well. p.17