The last few years have placed the fate of post-industrial towns into the spotlight, as the plight of communities whose economies have fallen on fallow ground has become a central discussion point of policy making on both sides of the Atlantic.
The de-industrialization across much of the western world has seen a large number of traditional industries enter terminal decline, with a profound impact upon the communities that grew up around those industries.
A central tranche of the policy response to this decline has been to try and encourage entrepreneurship in these communities so that new sectors rise to replace those that have fallen away. The hope was that this spirit of entrepreneurship would not only support individuals, but as the startups grew, give meaning back to the entire community.
Failure to reinvent
New research explores the success of this policy, and reveals that little real improvement has been seen in communities across the United Kingdom, with no signs of startup growth to replace the large employers that have gradually left the country.
“The nature of the entrepreneurial activity in Doncaster is both highly localised and underproductive, verging on what researchers refer to as‘subsistence entrepreneurship’, and therefore has limited impact on economic growth,” the researchers explain.
The policies to promote entrepreneurship and economic regeneration have largely failed to return employment and growth to their former levels, much less seen any growth in those regions. Far from the high-tech jobs of startup lore, many of the new entrepreneurs were working for themselves in low-skill trades that did little to mask the impression that policies aimed at boosting entrepreneurship and economic growth were in reality more designed to mask shocking unemployment statistics.
What’s more, these policies often failed to take any account of the industries that formed the bedrock of these communities, and the considerable attachment the communities had to them. Indeed, much of the identity of towns was forged in the industries at their center. The legacy of employment in these industries played a crucial cultural role in the lack of success of attempts to imbue a spirit of entrepreneurship in the wake of their de-industrialization.
Looking to the past
As such, the community assessed by the paper still struggles to find a brighter future some 30 years after the heavy industries began to shut down in the town. The town remains riddled with low aspirations and minimal entrepreneurial ambition, with unemployment spanning multiple generations.
It should perhaps come as no surprise that the industrial history of a community has a strong impact on any prospects for entrepreneurship, but recent research highlights as much. A strong industrial presence in a community gives that community a real sense of identity and culture emerges around the industry that provides a focal point for citizens way of life.
For instance, a strong local employer gives people a fixed income and a relatively determined career path if they work hard. Such industries also often had a strong unionized culture. There was a distinct lack of any culture of entrepreneurship, and these cultural norms make many communities a fallow territory for entrepreneurship to emerge.
Indeed, the desire for a fair wage in return for a fair day’s work has largely passed down through generations, with young people today striving for the same sense of security rather than the inherent uncertainty of self-employment or entrepreneurship. Combine this with a longstanding legacy of low ambition and it’s perhaps no surprise that post-industrial communities have not become the entrepreneurial hotbeds that policy makers hoped they would be.
Fresh thinking
Research does provide a possible solution however, and it revolves around prompting greater mobility of people. The authors believe that how entrepreneurs view where they live is central to their views of entrepreneurship, and therefore policies have to be made with this perception of place in mind. The researchers distinguish four different types of entrepreneur based upon their relationship to the location they have based their startup in.
Locally born entrepreneurs are those who have created their business in the place they have lived their entire lives. Returnees by contrast left, often for studying, before returning to the place of their childhood. The third category were ‘in-migrants’, who were born elsewhere in the UK before moving to the area they created their business, and then immigrants who came from another country.
The authors suggest that many of the unique characteristics of rural locations, such as natural beauty and traditional heritage are not factored into policies designed to encourage and support entrepreneurship. They go on to suggest that the most successful rural entrepreneurs bring connections from their previous locations with them whilst also using these networks to ensure they have the knowledge and connections needed to thrive.
It’s a similar finding to that provided by an analysis of startups in rural Switzerland, which found that human capital was vital, and with many rural communities lacking comparable human resources to their urban counterparts, it’s imperative that entrepreneurs work extra hard to develop the networks they require.
Indeed, so important are these networks that in-migrant entrepreneurs were particularly likely to be successful, and so it may be fruitful to have specific policies aimed at supporting these people either to create a business or scale them up.
If policy makers wish to revitalize post-industrial communities therefore, it might be beneficial to encourage more people to move there from outside the region, with their fresh perspectives helping to overcome the industrial legacies of old and breath new life into the local economy.
