National Dialogue on
Entrepreneurship

Week of November 22 - November 26, 2004

Welcome to the National Dialogue on Entrepreneurship, an initiative of the Public Forum Institute made possible by a grant from the Kauffman Foundation of Kansas City. Through NDE-news, we bring you short summaries and analyses of various trends driving the innovation economy. Current and archived issues of are available online at www.publicforuminstitute.org/nde/news/nde-news.htm. To subscribe, visit www.publicforuminstitute.org/nde/join/

Links to the day's entrepreneurship stories from across the nation and around the world are posted each weekday at www.publicforuminstitute.org/nde - bookmark it and stay informed about the latest entrepreneurship news. 

New Resource for Community Colleges 

If you’re involved with the many community colleges supporting entrepreneurship initiatives, you should take a look at several new publications from the Community College/Vocational Industry Cluster Hubs project. This US Department of Education-backed project has created a national network of community colleges with interest and expertise in new ways of providing entrepreneurship training and support. The project participants soon determined that the absence of appropriate teaching materials and programs was one primary challenge facing community college administrators and faculty. The project has sought to fill this void by publishing two new reports: 1) A review and assessment of existing entrepreneurship curricula and tools targeted to community college students, and 2) A series of teaching case studies of entrepreneurs that focus on key issues of start-up businesses. 

To learn more about the Cluster Hubs project and to access these new reports, please visit www.clusterhubs.org
 

Small Business and Exporting

It’s commonplace to say that small businesses must think globally in the 21st century economy, but a new Small Business Administration (SBA)-sponsored study shows that acting on this belief is often easier said than done. Palmetto Consulting, a Georgia-based consultancy, interviewed nine South Carolina-based small firms to identify current barriers to exporting. Most respondents did not systematically pursue export markets. Instead, they opted for a reactive approach that simply responded to customer inquiries. Why? Firm managers feared the complexity of the exporting process. Out-of-pocket costs do not seem to be the primary fear, but transaction costs (e.g., travel, shipping, logistics) did deter them from seeking foreign customers. Researchers also identified psychological barriers. In some cases, business owners reported that they were more comfortable working with domestic customers in a local marketplace that was well understood. 

While the study’s small sample limits SBA’s ability to develop final conclusions from this research, the findings do shed light on key issues around small business exporting.

The November 2004 report, Costs of Developing a Foreign Market for a Small Business: The Market & Non-Market Barriers to Exporting by Small Firms, by Palmetto Consulting, is available at http://www.sba.gov/advo/research/rs241tot.pdf
 

New Measures of Rural Entrepreneurship

Economists at the Federal Reserve Bank of Kansas City have been working for some time to develop new ways to track rural entrepreneurship activity. A recent article in The Main Street Economist, by Kansas City Fed researcher Sarah Low, summarizes some of this work. Low argues that understanding regional entrepreneurial activity requires that we measure both the breadth and depth of entrepreneurial activity. Breadth is measured by a region’s ratio of self-employment to total employment; depth can be measured by both average self-employed income and the ratio of self-employed income to receipts. Low further notes that rural America typically has high breadth and low depth of entrepreneurship. In other words, rural regions have many entrepreneurs, but they are not as engaged in high-value-added activities as their urban counterparts. 

Regional Asset Indicators: Entrepreneurship Breadth and Depth, by Sarah Low, appears in the September 2004 edition of The Main Street Economist and is available at http://www.kc.frb.org/RuralCenter/mainstreet/MSE_0904.pdf 

Visa Tabs Seattle as Most Innovative Metropolitan Area

The community ranking business is getting more crowded everyday; the latest entrant is the credit card giant, Visa. As part of its Ideas Happen campaign (a competition for new and innovative ideas from young people aged 18-29), Visa has released a ranking of the most innovative metropolitan areas in the US. Examining the 50 top metropolitan statistical areas (MSAs), Visa sought to measure levels of entrepreneurship, self-expression and creativity, and community-mindedness. Based on these categories, Seattle ranks number one on the overall Visa Innovation Index. Austin, TX takes the top spot in the Entrepreneurship category, Providence, RI came out on top in terms of Community, and Los Angeles scored highest in the Self-Expression category. 

To learn more about the Visa Innovation Index, visit http://usa.visa.com/about_visa/newsroom/press_releases/nr235.html. Information on the Ideas Happen contest can be found at www.ideashappen.com.

Diversity Pays

Recent research by Richard Florida and others has argued that a community’s diversity can have a positive impact in stimulating entrepreneurship and economic development. While these ideas have gained a great deal of attention, empirical support for these claims has sometimes been lacking. However, a new National Bureau of Economic Research report finds that cultural diversity and economic prosperity do appear to be linked. Researchers examined US metropolitan areas and found that regions with a significant increase in foreign-born residents between 1970 and 1990 also experienced a significant jump in median wages and rental housing prices. The authors argue that these findings indicate that cultural diversity contributes to better economic outcomes. More specifically, it appears that an influx of new “talent” helps increase the overall productivity of native-born residents. As the authors note, “ . . . a more multi-cultural urban environment makes US-born citizens more productive.”

The Economic Value of Cultural Diversity: Evidence from US Cities, by Gianmarco I.P. Ottaviano and Giovanni Peri (November 2004--NBER Working Paper No. w10904) is available at http://www.nber.org/papers/w10904

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