Page 267 - 1-Entrepreneurship and Local Economic Development by Norman Walzer (z-lib.org)

256 Scott Loveridge

retention and expansion. All of these approaches may be appropriate for
a community, depending on the situation.
Probably the most important asset in a community is the available time
of its leadership—a resource that is often undervalued in assessing eco-
nomic development strategies. Communities tend to look at costs per job
created in terms of costs of subsidies (e.g., tax abatements and other bene-
fits) extended to a firm. Forgotten are the time costs of leaders who plan
and implement the economic development strategy.
In community-based entrepreneurship, the time costs are likely to out-
weigh the out-of-pocket expenses required to help firms. This can be posi-
tive and, because entrepreneurial firms require fewer formal subsidies than
recruited firms, the community can be more self-reliant. The outcome trans-
lates into a potentially more sustainable economic development system.
Once such a system becomes part of the local culture, it can be sustained
with less effort, whereas the costs of recruiting firms have risen (CFED
2007).
Nevertheless, it is important to consider time costs before committing lo-
cal leadership to an entrepreneurship effort. The initial phases will take
time, and results may not appear for a while. Thus, entrepreneurship strate-
gies require substantial long-term commitment, and research has shown
that people are fairly impatient for results with respect to economic devel-
opment (Loveridge and Loy 1998). So, the case for supporting an entrepre-
neurship approach must be made.
How does one decide, then, whether there is a need to establish a
stronger community-based entrepreneurial system in a specific area? It is
perhaps best to start with the state. How does the state stack up against oth-
ers in terms of entrepreneurship? Goetz and Freshwater (2001) conducted
a statistical analysis of various indicators with a formal model ranking
states, while the Small Business Foundation of Michigan (2004) used a
broad array of indicators to construct a “grade” for entrepreneurialism
(table 13.1). While the two studies differ in data sources, assessment tech-
niques, and in years covered, there is surprising consistency in the results
(with some notable exceptions, e.g., Georgia and Montana). California,
Utah, and Virginia received “A-” grades and were also in the top ten in the
Goetz and Freshwater analysis, so high scorers in both systems also seem to
follow common knowledge. All three states have reputations as vibrant, en-
trepreneurial places.
Clearly, states differ in performance and reputation with respect to culti-
vating entrepreneurs even if the differences in the two studies do point to a
need to develop an agreed-upon and scientifically defensible way of rating
a state’s performance. Still, if a state scores well on both measures, there can
at least be some confidence of positive community role models in the re-
gion and a reasonably favorable state climate.