Understanding the Social Impact of Micro Businesses in Rural Market Towns in Northumberland
ABSTRACT
Applicability to conference theme
With rural communities facing momentous change post Brexit and many commentators suggesting “broken communities” led to the Brexit vote, this paper considers the role of small businesses as social agents for change within rural communities in Northumberland, a frontier county bordering an increasingly devolved Scotland.
The paper considers the micro-businesses contribution to creating sustainable rural communities. It tackles new frontiers challenging the current policy focus on high growth business support by demonstrating the significant value created by micro- business to support viable and inclusive rural community space. The paper reinforces the analysis from the Small Business Longitudinal Survey (Phillipson et al 2018) which dispels the myth that rural spaces are less entrepreneurial than urban space.
Post Brexit funding streams for SMEs and rural areas will need to be redesigned due to the loss of European funding via schemes such as LEADER and the Common Agricultural Policy. Previous government funding focused on agriculture as the main driver of the rural economy. Whilst there is a shift of focus from paying farmers for producing food towards subsidising farmers for providing “public good”, the focus for broader rural enterprise policy continues to be economic productivity. Brexit and the reducing “post productivism” contribution of agriculture to the rural economy has resulted in a focus on the wider rural economy and how best to restructure government funding post the end of the UK’s involvement in the EU Common Agricultural Policy. With continued reductions in local government funding to support community resilience, this paper argues that there is an opportunity to recognise small businesses as social agents for change rather than simply economic players.
Aims
This paper aims to:
Methodology
This qualitative project explores methodologies, rooted in ‘grounded theory’ to examine the value of small businesses in three case study areas in rural Northumberland in North East England.
As a study undertaken in the context of rural market towns, the research explores conditions at a macro (policy), meso (community) and micro (SME) level that enable SME social impact.
Due to the requirement to understand this phenomena from three different perspectives, a qualitative methodology was used.
The micro level analysis focused on the role of the small business in creating social impact and was researched through 30 semi- structured interviews with entrepreneurs and community leaders based in three case study areas.
The meso level is examined by focusing the qualitative interviews within three case study areas situated in the same policy environment within North Northumberland, allowing the opportunity to compare and contrast. The case study for the purpose of this research is an electoral ward, a physical geographically bounded space and a space defined by politics.
The use of case studies is to help understand the complex relationship between factors as they operate within a social space. The case study approach allowed the researcher to see whether theoretical predictions were found in multiple settings or whether there are specific contextual phenomena which embed it in place. This allowed further explanation of why and how small businesses create social impact.
The macro level research relates to policy makers at a regional level and was undertaken via 10 semi -structured interviews.
Contribution
There is growing recognition that context matters in entrepreneurship (Boettke & Coyne 2009). This research contributes to rural enterprise theory considering the collective capacity of entrepreneurs to transform communities and to generate a value that can be measured in“greater possibilities for living” rather than simply the monetary (Daskalaki, Hjorth & Mair, 2015, p420).
The research shows that at micro level of analysis, small businesses consciously and unconsciously impact their communities. They do this by delivering trusted local services/ products that make living rurally easier; underpin infrastructure by creating employment and demand for auxiliary services; enable community by acting as a hub; import new ideas, skills, capital, collaborations, quality; and, promote their community.
At a meso level of analysis, the SMEs report limited institutional support suggesting that “local policy – making” is not reaching small businesses in rural communities. But there is also clear reluctance from small businesses to form a network or join business clubs. This is in part due to the entrepreneurs’ “individualist” and “positive” characteristics which fail to see the need to work collectively and dislike the reputation of business groups as “whinging” and “problem orientated” rather than celebrating entrepreneurial success. The research highlights that rural entrepreneurship takes place not in abstract sites of production and consumption but in the domain of meaningful social life –in complex spaces of cultural and social interaction –where people live and learn. These rural places - both physical, historic and perceived – provide the motivation for many business, shape product offering and inspire brands.
At a macro level of analysis, interviews with policy makers highlight that government views small business policy as incentivising economic growth rather than recognising the social impact of small businesses. Policy makers cite evidence-based policy making and current economic metrics as a barrier to recognising the social impact of SMEs, in particular Treasury evaluation metrics for business support which focus on jobs created or saved and a narrow definition of productivity are cited as a key barrier to supporting micro businesses.
Policy and Practice Implications
This research recognises that Small Business Social Responsibility requires a theoretical grounding distinct from broader CSR (Soundarajaran 2018), and that current policy making is not reaching micro-businesses. Through this enhanced understanding of SME’s social impact and how to assess this within rural communities, policymakers can make better informed decisions on: whether there is wider benefit to support specific forms of government intervention aimed at micro-businesses within these policy and societal communities; and if so, the appropriate mechanisms to communicate and deliver this support
Keywords. - Entrepreneurship & micro businesses; Social Responsibility; Rural; Community; Family Business
References
Boettke, P.J. and Coyne, C.J., 2009. Context matters: Institutions and entrepreneurship. Foundations and Trends® in Entrepreneurship, 5(3), pp.135-209.
Daskalaki, M., Hjorth, D. and Mair, J., 2015. Are entrepreneurship, communities, and social transformation related?. Journal of Management Inquiry, 24(4), pp.419-423.
Phillipson, J., Gorton, M., Maioli, S., Newbery, R., Tiwasing, P. and Turner, R., 2017. Small rural firms in English regions: analysis and key findings from the UK Longitudinal Small Business Survey, 2015. Newcastle upon Tyne: Newcastle University Centre for Rural Economy and Business School.
Shucksmith, M., 2000. Endogenous development, social capital and social inclusion: Perspectives from LEADER in the UK. Sociologia ruralis, 40(2), pp.208-218
Skerratt, S. and Steiner, A., 2013. Working with communities-of-place: Complexities of empowerment. Local Economy, 28(3), pp.320-338.
Soundararajan V., Jamali D. & Spence L.J. 2018. Small business social responsibility: A critical multilevel review, synthesis and research agenda. International Journal of Management Reviews, 20, 934-956.
Spence, L. J. 2016. Small business social responsibility: Expanding core CSR theory. Business & Society, 55, 23-55.
Title: Farm Innovation and Technology Adoption: Drivers, Barriers and Success Factors.
Topic
This paper explores the role farm innovation and technology adoption has in the context of farm entrepreneurship. Throughout this paper we explore the drivers, barriers and the Critical Success Factors (CSF's) of innovation and technology adoption. Extensive literature exists highlighting innovative technologies and practices within both the arable and pastoral sectors (King, 2017). The larger scale farms possess abilities to achieve economies of scale, particularly within the dairy and arable sectors, and appear more welcoming to technology adoption (Morris, 2017). Many farm managers within these sectors invest in agricultural software and technologies to streamline farm management, increase productivity, and make efficiency gains to improve the strategic positioning of their farming enterprises (Barnes et al., 2019).
National improvements in Information Technology (IT) infrastructure drives the development of technology within the sector. Through the development of ‘Internet of Things’ (IoT), Artificial Intelligence (AI), and big data, farmers can now integrate emerging technological innovations into their business models, engaging in precision agriculture and smart farming practices, through the utilisation of; drones, autonomous machinery, crop and weather monitoring software and automated milking parlours, helping to overcome challenges within the agri-economic environment (Wolfert et al., 2017; NFU, 2019). The role of innovation and technology within the farming sector is vital for future agricultural policy development, ensuring; the production of affordable and high-quality produce, supply chain traceability, and the production and maintenance of public goods, whilst ensuring farmers are doing their part to reduce carbon emissions, combat climate change and achieve environmental targets (GOV.UK, 2019; DEFRA, 2019).
Whilst policy ambitions for technology adoption are high, many farmers remain pessimistic. Much of the British agricultural sector is lacking in terms of technology development, with panic of the digital revolution and the move to ‘Industry 4.0’ bypassing that of UK agriculture (Morris, 2017). Many farmers, hill farmers in particular, still to this day maintain traditional farming practices for varying reasons relating to; farm suitability, topography, age of farm holder, skillset, broadband connectivity, costs inter alia (Morris, Henley & Dowell, 2017). For many farmers, the need to adopt technology is not there, the level of agricultural production is too small to justify the costs, their way of life does not require any technology outside of what they have (Lima et al., 2018). Agricultural innovations and technological developments offer remarkable opportunities in terms of farm business improvement, but there are immerse challenges in influencing farmers to adopt such technologies.
Entrepreneurial farmers are embracing technology adoption, diversifying through innovation adoption with technology forming a key cornerstone of farming enterprises. The rise of vertical farming and Controlled Environment Agriculture provides opportunities for farming in urban, as opposed to rural, areas. Yet, 40% of farm holders in the UK are over the age of 65, with less than 3% being under the age of 35, with a significant proportion of the industry represented by traditional farmers. This paper explores, through the opposing world-views, the attitudes and perceptions towards technology adoption between the ‘traditionalist’ and ‘entrepreneurial farmer’. The study engages with two real-life farming cases; Gordon, a conventional livestock farmer and Stacey, an entrepreneurial vertical farmer exploring the drivers, barriers and success factors of technology and innovation adoption.
Applicability to conference theme: ‘SPACE – exploring new frontiers and entrepreneurial places’.
Innovation and technology is changing agricultural practices and re-defining the role of the farmer. Through technological integration the farmer is no longer limited by natural land space. Technological diversification allows the entrepreneurial farmer to explore new frontiers, some of which is unknown territory to conventional farmers.
Aim.
The aim of this paper is to understand the role technology adoption and innovation has within a farm entrepreneurship context. The paper builds upon published research by exploring in greater depth the farm technology adoption process.
Methodology.
The present study is exploratory in nature adopting a qualitative methodology and the case study research strategy. Semi-structured interviews with farm owners were conducted, applying an interpretive lens to understand the subjective attitudes and perceptions held by farmers regarding innovation and technology adoption. The methodology is underpinned by an adapted version of McElwee’s (2008) taxonomy, interviewing farmers reflective of the entrepreneurial and traditionalist typologies.
Findings & Contribution.
The findings build upon prior literature relating to farm entrepreneurship, technology adoption, farm business success and business strategy. The findings make several literary, practical and policy-based contributions. Additional barriers absent from the literature were found; consequences of technology use, cultural change, and skill-loss. The drivers were explored, finding technology adoption would not help the traditionalist farmer achieve farm success but plays an integral role in the entrepreneurial farmers operations.
Implications for practice.
The findings can be useful for actors within the agri-economy, providing an insight into the; drivers, the motivations for farmers to adopt technology; barriers, understanding the rationale behind technology not being adopted; success factors, understanding how technology fits in with the farmers vision of success. The utilisation of the two farmer types allows a collaborative learning approach, integrating multiple farmer world-views.
Implications for policy.
The results could be useful to policymakers, providing a practical insight into the lived experience of farmers. Agricultural policy-redesign places pressures on farmers to adopt entrepreneurial strategies to increase productivity. The UK government pledges its support for an Agri-tech strategy to boost farm based-productivity and strengthen national agricultural competitiveness. This studies illustrates the existing attitudes of two farmer typologies significant to the agricultural industry.
Reference
Barnes, A. P., Soto, I., Eory, V., Beck, B., Balafoutis, A., Sánchez, B., ... & Gómez-Barbero, M. (2019). Exploring the adoption of precision agricultural technologies: A cross regional study of EU farmers. Land Use Policy, 80, 163-174.
Corradini, C., Demirel, P., & Battisti, G. (2016). Technological diversification within UK’s small serial innovators. Small Business Economics, 47(1), 163-177.
DEFRA. (2019). Moving Away from Direct Payment. Retrieved from https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/740669/agri-bill-evidence-slide-pack-direct-payments.pdf.
Downing, E. & Coe, S. (2018). Brexit: Future UK agriculture policy. Retrieved from https://www.parliament.uk/documents/commons-library/Brexit-UK-agriculture-policy-CBP-8218.pdf.
GOV.UK. (2019). The Future of Food and Farming Report. Retrieved from https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/288329/11-546-future-of-food-and-farming-report.pdf.
King, A. (2017). The future of agriculture. Nature, 544(7651), S21-S23.
Lima, E., Hopkins, T., Gurney, E., Shortall, O., Lovatt, F., Davies, P., ... & Kaler, J. (2018). Drivers for precision livestock technology adoption: A study of factors associated with adoption of electronic identification technology by commercial sheep farmers in England and Wales. PloS one, 13(1), e0190489.
Marshall, S., & Williams, S. (2019). An Investigation into the Sustainable Actions of Micro-and Small Businesses. In Responsibility and Governance (pp. 237-255). Springer, Singapore.
McElwee G., 2004. A segmentation framework for the farm sector. In: The 3rd Rural Entrepreneurship Conference, University of Paisley, Scotland, October 2004, Paisley.
McElwee, G., & Smith, R. (2012). Classifying the strategic capability of farmers: A segmentation framework. International Journal of Entrepreneurial Venturing, doi:10.1504/IJEV.2012.046517
Morris, W. (2017). Technology adoption, entrepreneurship and efficiency in agricultural businesses: the case of upland farmers in Wales. Unpublished PhD Thesis. Aberystwyth University.
Morris, W., Henley, A., & Dowell, D. (2017). Farm diversification, entrepreneurship and technology adoption: Analysis of upland farmers in wales. Journal of Rural Studies, 53, 132-143. doi:10.1016/j.jrurstud.2017.05.014
NFU. (2019). The Future of Food 2040. Retrieved from https://www.nfuonline.com/nfu-online/news/the-future-of-food-2040/.
Pyysiäinen, J., Anderson, A., McElwee, G., & Vesala, K. (2006). Developing the entrepreneurial skills of farmers: Some myths explored. International Journal of Entrepreneurial Behaviour & Research, 12(1), 21-39. doi:10.1108/13552550610644463
Thomaier, S., Specht, K., Henckel, D., Dierich, A., Siebert, R., Freisinger, U. B., & Sawicka, M. (2015). Farming in and on urban buildings: Present practice and specific novelties of Zero-Acreage Farming (ZFarming). Renewable Agriculture and Food Systems, 30(1), 43-54.
Wolfert, S., Ge, L., Verdouw, C., & Bogaardt, M. J. (2017). Big data in smart farming–a review. Agricultural Systems, 153, 69-80.
Zahedi, S. R., & Zahedi, S. M. (2012). Role of information and communication technologies in modern agriculture. International Journal of Agriculture and Crop Sciences, 4(23), 1725-1728.
Aim
This research aims to identify and analyse the strategic resources of small farm businesses in order to explore their potentials for opportunity creation and improved competitiveness. The poor competitiveness of small farm business in food production has resulted in their engagement in diversified activities that may be a threat to long term food security. Worryingly, this diversification trend has continued as farmers increasingly adopt non-food activities to bolster ailing profits (Scotgov, 2019).
Entrepreneurs may be defined as “economic actors who seek to exploit opportunities in pursuit of wealth creation” (Barney, Alvarez and Anderson 2013 p302). As individuals, they have also been described as alert persons acutely perceptive at recognising and exploiting opportunities (Kirzner 1979). Since many opportunities in business environments usually result from shocks to the established systems e.g. changes in technology (Tushman and Anderson 1986), political and social change (Schumpeter1939) etc. entrepreneurial activities have also been associated with discovering opportunities in such volatile or dynamic business environments. Thereby encouraging the personal characterisation of entrepreneurs as risk takers (Caird 1991), extroverts (Wooten et al. 1999), over-achievers (Begley and Boyd 1986) etc. Despite this fact, entrepreneurial activities are not limited to such business environments nor individuals. In the UK for instance, entrepreneurship was noted to be the most important aspect of farming (Phelan and Sharpley, 2012) which is a business sector that has shown an aversion for change or risk. Governments and other stakeholders have consistently resisted changes in the sector by providing subsidies for farm businesses since they consider the stability of the sector as crucial to rural economies (ScotGov, 2015). These regulatory activities, in turn, limits the possibilities of shocks as well as opportunities, in these business environments. Furthermore, a preponderance of family businesses in the small farm sector may also be moderating risk-taking. This is because many family farmers were observed to be risk-averse in order to ensure the continuity of their farm businesses which ensure their inter-generational transfer goals (Barnes et al., 2016). Invariably, entrepreneurial activities in the small farm sector cannot simply rely on spontaneous opportunism and risk-taking for its success. Rather, entrepreneurs in this sector must adopt a strategic approach aimed at creating opportunities that may ensure their success (Westgren and Wuebker, 2019).
Applicability to the conference theme – ‘SPACE – exploring new frontiers and entrepreneurial places’
This research explores the extent to which strategic behaviours in the small farm sector can be thought of as entrepreneurial, a sector where the environmental characteristics and individual attributes do not at first seem to accord with the entrepreneurial aspects highlighted from findings from prior research. The entrepreneurship discourse may be enriched from this empirical examination that broadens the scope of entrepreneurship to atypical business environments whilst uniquely incorporating a customer perspective in its examination.
Methodology
This research followed a two stage methodological process. First, 20 in-depth interviews were undertaken with customers at farm shops and farmer’s markets. In order to accommodate assertions that differences may exist between the rural and urban customer (Ilbery, 1991; Carey et al., 2011); a sample frame reflecting these sort of respondents was developed. Glasgow, the largest urban area by population in Scotland, was selected as the frame for urban respondents while it’s surrounding towns - over 20km from Glasgow center (Ilbery’s et al. 1996) - was selected as the sample frame for rural respondents. On this basis, two farmers’ markets and four farm shops were selected. The respondents’ selected from the same frame were those that were observed buying a fresh agricultural product.
The customer benefits in the sector were identified and served as the basis for identifying strategic resources. We then purposively sampled our farm business to ensure the selected farm business directly provided these benefits to customers either through a farm shop or a farmers market. From this sample frame, we recruited eighteen small farm businesses which were stratified to broadly represent the sector. This stratification yielded four small farm categories i.e. crop, livestock, dairy and poultry. Semi-structured interviewing techniques were used to collect relevant data that were content analysed using the Nvivo software.
Findings
Our findings identified eleven strategic resources within the Scottish small farm sector of which four presented potentials for opportunity creation in all the farm categories. The remaining strategic resources were exclusively relevant to specific markets i.e. four for crop producers, three for livestock producers and one for dairy producers. These strategic resources should have the potentials to create opportunities in perceived customer benefit areas including taste, health and choice benefits.
Contribution
This research unearths opportunities within food production that may stall, or even reverse, the non-food diversification trend currently prevalent within the small farm sector. Our examination highlights the strategic entrepreneurial potentials of small farm businesses in creating opportunities that can be exploited to improve their performance. This creative process involves the endogenous development of business resources and capabilities that are strategically exploited to create opportunities (Barney, Alvarez and Anderson, 2013; Van Rensburg, 2013). A key contribution of this research is the deployment of both firm-based and customer-based perspectives for resource deployment and value creation. Whilst we employ the resource-based perspective to identify the strategic resources of the small-farm businesses, we incorporate a customer perspective, following persuasive arguments that the economic success of any value creation process must be based on customer needs (Priem, 2007; Barney, Alvarez and Anderson, 2013).
Implications for Practice
The implication of these findings for Scottish small farm businesses is that it highlights those business activities they can effectively combine to develop strategic resources that create opportunities that may improve competitiveness. Additionally, they also benefit from the proposed entrepreneurial approach which is particularly suited to their unique business environment and context.
Implications for Policy
Relevant government agencies and policymakers may also consult the finding of this research to encourage farming activities that promote food production to, hopefully, stall the possible threat to food security that is based on non-food diversification.
Topic, aim and applicability to the conference theme
This paper focuses on a concept we call pooled entrepreneuring, where individual venture development activities extend over firm boundaries, giving rise to collaborative ventures and innovative use of place-bound resources. These pooled collaborative ventures can redefine prevailing conditions, allowing micro-ventures that would otherwise be untenable to develop and survive. Our aim is to provide insight into how micro-actors in a shared rural place interact and work together to solve their individual venture development challenges, and in the process develop new opportunity and collaborative ventures. Our attention is directed towards identifying and understanding the entrepreneuring that arises when local actors pool their problems, resources, and creative energies; and how this pooled entrepreneuring builds a local community that reshapes some of the constraints of rural space.
We take our point of departure from the rural entrepreneurship literature, where rural ventures are identified from their location, their product and their market (Bosworth 2012), with a specific interest in place-tied rural entrepreneurship as opposed to loosely coupled entrepreneurship in rural space (Korsgaard, et al 2015). We recognize the distinction between place, where there is local meaning, identity and value (Cresswell 2014), and space, which we view as structure that arises and is recognized through action (Low 2008). While the structure of space in many ways defines and confines action, through entrepreneurial processes, structure can also bring about action that forges new and reforms existing links creating change (Gaddefors and Anderson 2017).
Methodology
Our results are based on a case study of a farmer network in a mid-Sweden rural community. The place is typical for Sweden, with local population of about 2500, mostly living in a village center, surrounded by farms in a moderately less-favored agricultural area. The community has good access to two a large urban center, less than one-hours drive. Data has been collected through a set of interviews with nine network participants, all of whom have diversified ventures in addition to primary agricultural production in their farm business. This interview data is combined with information from a broader ethnographic study of the local rural place.
Contributions and implications
All of the nine interviewed network participants own and manage farm businesses with diversified enterprises. In the firm of one of the interviewed participants, the agricultural resources are now rented out, and the active venture has become specialized in contract machine work, including agriculture, construction and road service. The other eight interviewed participants are actively working six farms (in two farms, couples were interviewed), with a range of primary production and size: One of the farms is a “typical” Swedish mid-sized commercial dairy farm, with crop and beef production supporting the main dairy production. These other farms are smaller and also “typical” for Sweden in that their limited resources make them non-competitive on the conventional agricultural markets.
These “typical” stereotypes reflect the space for farming and agricultural production: The increasingly competitive and global market of conventional food production demands large production units, with strong economies of scale and favourable natural resource conditions, producing large volumes of low-margin standardized raw produce for large-scale non-local processors. Yet in many places, farm and agricultural resources do not fit well in this conventional space. Our studied cases show how individuals in a community work in parallel and in collaboration to develop value-creating ventures with the limited resources they have at hand. As these new ventures establish a foothold for their survival in and with the local place, they challenge existing structure of space and create not only pragmatic solutions but also new models of practice that can redefine space.
Our study shows that the development of these spatially-disadvantaged enterprises is characterized by what we call pooled entrepreneuring. Pooled entrepreneuring involves a parallel process of individual actors finding solutions to their individual micro-enterprise needs, together with collective efforts to develop collective ventures. Individual entrepreneurial processes interweave with other individual entrepreneurial process, sometimes in mutually beneficial exchange, sometime spawning a joint-venture, and sometimes in simple acts of community exchange.
We can see in this pooled entrepreneuring both synergy effects, where sub-optimal micro-ventures gain a platform that supports their continued existence and development, and ripple effects, where the collaborative efforts give rise to new enacted opportunities.
We believe our findings have implications for policy and practice: Individually, the separate ventures that have been studied make marginal contributions to local development, and many make but marginal contributions to a family’s or whole farm businesses’s economy. Taken together, however, we can see that the individual ventures create a critical mass that not only supports the existence of the individual micro-ventures but also contributes to sense of community and identity of place and puts pressure on some of the spatial constraints. While this study does not have the scope to see how space has been affected in the long-term, it does show how individuals in local community work together in navigating the limitations of individual small-scale, and that as their solutions emerge, they change the conditions (space) for others – both locally and non-locally.
Bosworth, G. 2012. “Characterising Rural Businesses – Tales from the Paperman.” Journal of Rural Studies 28 (4): 499–506.
Cresswell, T. 2014. Place: An Introduction. John Wiley & Sons.
Gaddefors, J., and A. Anderson. 2017. “Entrepreneursheep and Context: When Entrepreneurship Is Greater than Entrepreneurs.” International Journal of Entrepreneurial Behavior & Research 23 (2): 267–278.
Korsgaard, S., S. Müller, and H. Tanvig. 2015. “Rural Entrepreneurship or Entrepreneurship in the Rural – between Place and Space.” International Journal of Entrepreneurial Behavior & Research 21 (1): 5–26.
Low, M. 2008. “The Constitution of Space: The Structuration of Spaces Through the Simultaneity of Effect and Perception.” European Journal of Social Theory 11 (1): 25–49.