Nurturing Local Economic Resilience:How Communities Can Develop Entrepreneurial Potential

The concept of "entrepreneurial potential" offers a valuable framework for helping promote local
economic resilience. We can enhance local entrepreneurial potential by increasing the number of potential
entrepreneurs. As entrepreneurship represents planned activity, then we must focus on the intentional
process that underlies the decision to pursue opportunities. In turn, research on intentions shows us the
specific perceptions that increase or decrease intentions; communities must create a climate that enhances
these perceptions of feasibility and desirability.

In short, communities can change perceptions to empower
potential entrepreneurs to take advantage of personally viable opportunities when the environment
presents them.

By: Norris F. Krueger
Entrepreneurial Strategies
Bozeman, MT 59718
Phone: 406-587-5664

Introduction

An entrepreneurial spirit and culture are vital to fostering entrepreneurial activity in a community
(Delbecq & Weiss, 1988; Jelinek & Schoonhoven, 1991). A community, in turn, that supports its
entrepreneurs is much more likely to be resilient in the face of increasingly rapid change in markets,
technologies and competition. As the world changes, older competitive advantages erode and older
opportunities dissipate. Individuals and organizations must continuously identify new opportunities. To
maintain their competitiveness in a rapidly changing world requires that local economies adapt to take
advantage of change.

"Resilience," in Shapero’s view, is a critical characteristic of healthy communities. Resilience
requires a healthy supply of entrepreneurs who, by taking the initiative when an opportunity arises, help
the local economy adapt to an increasingly volatile environment. If communities are to encourage and
support this supply of entrepreneurs, they must be able to identify these potential initiative takers and
determine how to nurture their talent (1981). Communities must support this process wholeheartedly if
they are to develop economically.

For example, countries where wealth-creating careers are encouraged
grow faster than countries where rent-seeking careers (e.g., lawyers) are encouraged (Murphy, et al.,
1991). Competitiveness and ongoing development both require that we ask not "Are we competitive?"
but, rather, ”Will we be competitive?" A healthy economy and a healthy community both reflect a
resilience that is born of the ability to self-renew. Thus communities require a "continual emergence of
opportunities" (Holmes & Schmitz, 1990). That is, we need an ongoing supply of perceived new
opportunities.

Shapero (1981) offers Jane Jacobs’ oft-cited example of how Birmingham, a city home to a wide
variety of entrepreneurial small firms, showed greater long-term resilience than Manchester, a city
dominated by one industry. Manchester’s specialized efficiency proved no match for Birmingham, "city of
a thousand trades," and its greater receptivity to entrepreneurship. Recently, Glaeser and colleagues found
solid empirical support for Jacobs’ observation, that is, employment growth in cities depends on vigorous
local competition and on variety, not specialization (1992).

For the full paper: http://www.usasbe.org/knowledge/proceedings/1997/P115Krueger.PDF