Revitalizing Local Communities through Entrepreneurship

Entrepreneurship has long been touted as a means of revitalizing local communities, but its potential has not always translated into success. While initiatives to encourage entrepreneurship have been implemented across the globe, many have failed to address the specific needs of impoverished communities. A review of 200 articles on entrepreneurship and poverty alleviation found that entrepreneurial initiatives aiming to address poverty through venture investment have been generally ineffective. A study of entrepreneurship across 44 countries also found that growth-oriented entrepreneurship did not generate as much impact in emerging economies as it did in developed economies.

In order to explore the effectiveness of entrepreneurship in revitalizing local communities, researchers conducted an eight-year investigation of two organizations in Detroit. The organizations shared the goal of revitalizing Detroit through entrepreneurship, but took different approaches. One organization, ACCEL, was a traditional business accelerator that focused on identifying ventures with high-growth potential that were likely to attract venture capital investment. The other organization, GREEN, was an alternative incubator that encouraged startups to leverage local resources to nurture their growth.

The researchers found that ACCEL’s focus on scaling up resulted in ventures that grew explosively but left the local community after securing larger rounds of funding. In contrast, GREEN’s approach of scaling deep resulted in ventures that never expanded beyond Detroit, but successfully addressed local problems and leveraged local resources. Ventures that scaled deep invested in fostering lasting, local relationships and solving local problems, resulting in sustained impact on the local community.

The researchers suggest that a focus on scaling deep, rather than scaling up, may be more effective in harnessing the power of entrepreneurship to revitalize impoverished places. Policymakers should explicitly focus on supporting ventures that will create novel solutions to local problems by repurposing local resources. By fostering a mindset of scaling deep, business leaders and policymakers can support ventures that offer strong returns while also lifting up poorer places to achieve sustained self-reliance.

ChatGPT Generated

Source : https://hbr.org/2022/01/research-how-entrepreneurship-can-revitalize-local-communities