Working in Rural America

A Story from Big City Atlanta

In 2004, the National Business Incubation Association (NBIA) annual conference was held in Atlanta, Georgia. By almost anyone’s definition, Atlanta is a big city and as far away from rural America as you can get. Just before the conference, a leading venture capital investment firm requested some help in exploring investing in rural America. These experts wanted to learn more about rural areas. As part of the conversation, the venture capital staff was asked to define rural America in their own terms and they responded…

“When we think of rural America, we think of places maybe like Lincoln, Nebraska, and definitely Omaha, Nebraska.”

For reference purposes, Lincoln, Nebraska, is now a city of 250,000 and the Omaha metro area now exceeds 650,000! When we think of rural, we visualize places like Dickinson, North Dakota (16,000), Mullen, Nebraska (450), Fairfield, Iowa (9,500), or Douglas, Georgia (10,600). Obviously, there is a real disconnect between perceptions of rural and realities. Working in Mullen or Douglas is a whole lot different than working in Lincoln or Omaha.

What is Rural?

Every community is unique and offers a special set of challenges. Understanding the nature and character of a landscape is fundamental to developing it effectively. We begin our exploration of Working in Rural America with a search for a definition of rural.

Rural America accounts for between 70% and 80% of the geographic area of the United States. Roughly 55 million Americans (about 20%) call rural home. Rural America’s economic and cultural contributions fall somewhere between these two statistics—greater than the population base would suggest, but less than the geographic ratio.

Finally, there is a sociological rural America with major implications for development. We all have our ideas, images, and biases when we hear the word “rural” or think about rural places. However, as America has become more demographically and culturally urban, our clarity of understanding of “what is rural” has diminished.

This question seems more important to non-rural organizations working in rural than to folks from rural places. The question is most likely rooted in the desire to better define whether policies and programs need to be customized or changed to meet “rural” circumstances. We’ll provide a framework, rather than a strict definition, to more effectively inform our work in rural places.

In a simple way, everyone knows rural America when they see it and experience it. Rural America is really a patchwork quilt of places and communities that are richly diverse. This diversity challenges us as we attempt to explore how development can enrich rural America. There is no one clear and compelling definition of rural America. There are, in fact, numerous and often conflicting definitions. We will attempt to create a framework for rural America by exploring it in four different ways:

• Demographically
• Spatially
• Sociologically
• Economically

Demographic Rural America
The U.S. federal government has a number of definitions based on demographic considerations. In recent years, agencies such as the U.S. Census Bureau, the U.S. Department of Agriculture and the U.S. Department of Housing and Urban Development have employed the following definitions based on size of place:

• Rural—Open country and places with 2,500 or fewer residents
• Urban—Places with more than 2,500 but fewer than 50,000 residents
• Metropolitan—Places with greater than 50,000 residents

Non-metropolitan—often a reference point for rural—is the inverse of metropolitan—places with fewer than 50,000 residents. However, there is a world of difference between a community of 250 in eastern Montana and a trade center in Iowa with 35,000 residents.

The U.S. Office of Management and Budget is changing our definitions of place with the addition of micropolitan places. Micropolitan places are basically the larger trade center communities located in rural America. This new statistical category will, in effect, reduce the number of people and communities that are “counted” as rural.

Spatial Rural America
For a number of years, America has been divided into 10 spatial types. The “Beale Code” (named after the system’s founder, Norman Beale of the Economic Research Service in the U.S. Department of Agriculture) is based on a continuum from central city to isolated rural. The Beale Code classifications are as follows:

By almost anyone’s standard, category nine is rural. There are two major problems with the Beale Code. First, it is based on counties. In many parts of America but particularly in the West where counties are huge geographically, a county may be defined as metro, yet still have vast rural areas. Second, with the proposed federal Office of Management and Budget changes, the relevance of the Beale Code may be undermined.

Sociological Rural America
In today’s world, with universal communications, fashion, and media, regional customs and values are eroding. One must be particularly isolated to remain disconnected from the universal world culture of the 21st century. Despite cultural globalization, there remain unique sociological differences. John Allen, director of the Western Rural Development Center in Logan, Utah, has summarized extensive research into a set of urban and rural cultural values. These are summarized as follows:

The reality is that a community may be rural demographically (because it is small) or spatially (because it is isolated) or economically (because of its industry mix), but have an urban sociology. For those rural places that continue to have rural value attributes, the implications for development are significant. These values contribute to the conservative nature of many rural places.

Rural America’s Economy
Rural America’s economy is as diverse as it is physically large. Traditionally, this economic activity has fallen into one of the following sectors: natural resource industries, processing and manufacturing industries, corridor industries, government-related activities, and local support activities. Generally, most of rural America’s core economic activities are rooted more in old economies than new economies.

NATURAL RESOURCE INDUSTRIES. Predominant among rural America’s economic sectors are the natural resource industries of farming, ranching, timbering, mining, energy production, and fisheries. When active and well resourced, these industries can create wealth and active economies. However, as resources are depleted, recession and decline undermine vitality.

PROCESSING INDUSTRIES. Closely associated with the natural resources and open spaces found in rural America are processing and manufacturing industries that need raw materials, unskilled and semi-skilled workforces, and space to operate. While these industries remain important to rural America, many are in decline because of depleted resources and the transition of manufacturing jobs to countries with lower wage scales and fewer environmental regulations.

CORRIDOR INDUSTRIES. Most Americans now live in either suburbs (roughly one in two Americans live in the suburbs) or central cities (where about one in four Americans live). These places require connection to each other and the rest of the world. Because rural America exists between metropolitan areas, a central economic activity is serving as a transportation and communication corridor. Railroads, highways, pipelines, and fiber optics all cross rural America and are creating secondary economic activity.

GOVERNMENT-RELATED INDUSTRIES. The federal government (and to a lesser extent state government) is a major economic player in rural America. The public sector owns and operates vast tracks of public lands, such as national forests, military installations, prisons, and waste sites. In addition to government land ownership and activities, the NGO sector (nongovernmental organizations) has an increasing presence in rural America. For example, the Nature Conservancy now works in more than 500 rural landscapes throughout America.

SUPPORT ACTIVITIES. Finally, there are assorted economic activities that support communities and their needs. Local government, retail, personal services, health care, and education all fall into this category. Emerging research suggests that, although deteriorating rural communities suffer from a lack of incoming wealth, it is their inability to capture and recycle the incoming wealth that has the greater negative effect.

Rural communities that are more isolated and struggling are, in many ways, reflections of the past. This rural America is defined by an historic economy, which in turn shaped its communities, societies and cultures. Creating a new future will require these communities to break free from their past. At the end of this section, we share some thoughts on sectors that may have the potential to create economic development in rural areas. As you read this section, we encourage you to open your mind and think outside the box about the economic opportunities that may exist in your community!

Implications for Our Work

Okay—there is no single definition of rural. Rural America is a very diverse set of places with complex histories, economies and cultural orientations. So, what does this really matter to communities that want to build stronger economies through entrepreneurship? It makes all the difference in the world! Development should be culturally appropriate. We know that is true from our failed efforts in the developing world. However, this lesson is true for inner city neighborhoods and rural areas, as well. By understanding the place we are trying to develop, we have a greater chance of succeeding.

Understanding a place’s history, its current economy and even its demographic trends is relatively easy. All these considerations are important and form the context in which development is undertaken. All have implications for creating an environment for entrepreneurs. However, understanding the sociology of a community is paramount.

The conservative and risk–adverse nature of rural places harbors great implications for creating more entrepreneurial economies in rural America. When rural people are profiled according to entrepreneurial attributes, the result is mixed. In general, rural people have strong entrepreneurial attributes related to independence, resourcefulness and initiative. However, these same characteristics may inhibit their willingness to network and partner. Working from John Allen’s research, we offer the following insights:

Anonymity
A central element that contributes to differentiated urban/rural values is the degree of anonymity that individuals enjoy within the community where they work and live. Persons located in larger urban communities enjoy a greater level of anonymity compared with persons residing in smaller communities, where it is difficult to remain anonymous. For entrepreneurs, the lack of anonymity makes it harder to fail (or to be wildly successful) without undergoing intense community scrutiny.

Community Interaction
In urban places, community interaction is voluntary with lower expectations for engagement. In rural communities, one is expected to be involved in the life of the community. This can range from the simple obligation to wave or say hello, to the requirements of full community engagement. To not be involved can bring on sanctions and marginal status. For a rural entrepreneur who is fully engaged in creating and growing an enterprise, this focused behavior can be perceived as disconnecting from the community, thus violating community norms.

Roles
In urban communities, roles are achieved through good work, and good connections. In rural communities, roles are often ascribed. If the parents are farmers, it may be hard for the community to accept the next generation in another role. Ascribed roles may limit the ability of a rural person to try something new and undermine the community’s ability to support new roles. Given that entrepreneurs are interested in the process and outcomes of creation–not necessarily being a banker, teacher, or some other ascribed role–it may be hard for an entrepreneur to thrive in such an environment.

Sanctions
The value of sanctions actually works in favor of entrepreneurial development. In rural communities, sanctions are particularistic, based on the individual and their particular history in the community. For example, a person may be an inventor and business creator with a mixed history of failure and success. If the community has accepted this behavior, it may be very supportive as long as accounts are balanced during successful periods, offsetting the anti-social behavior associated with failures.

Orientation
In urban places, the orientation is individualistic. In rural places, the orientation is toward the “group,” such as a church, the downtown merchants, or a community service club. The implications of this value for entrepreneurs are two-fold. If the group is supportive, a very positive climate can be created for the entrepreneur. If, however, the orientation is also parochial, it may prevent the entrepreneur from reaching outside of his or her group to network, to find markets or create strategic alliances.

Leadership
Finally, the leadership model in rural places tends to be traditional versus the rational model in urban places. For example, in rural places there is the formal leadership ascribed with roles—the mayor, school superintendent, banker, or rich person on the hill. This is traditional leadership. Within these communities, there are also builders—folks who can get things done. They tend to work below the surface and behave in ways that are accepted by traditional leadership. If traditional leadership is supportive, a positive entrepreneurial climate can be created within the community. For rural communities that are conservative, the role of traditional leaders is often to ensure that the community does not mess up (the price of failure is higher in smaller rural places). This conservator role can, in turn, inhibit entrepreneurial behavior.

The bottom line is that rural places may have less growth, fewer high growth entrepreneurs and a community culture that is less than supportive of entrepreneurial creativity. Those of us who live and work in rural communities must find the time to take stock of our community. By understanding our current environment better, we stand a stronger chance of building a more supportive environment for our entrepreneurs.

Shifting the Economic Development Paradigm in Rural America

Entrepreneurs are good at thinking outside the box, or more appropriately, looking at reality differently, which allows them to see market opportunities most of us miss. They embrace, manage and respond to change in a way that continually moves their ventures forward. We have historically organized our economy in certain ways, and our means of measuring success are based on that old framework. However, change has no respect for old ways of doing the business of economic development. Community leaders in rural America must become more entrepreneurial in the way they think about economic development. Leadership from both private and civic entrepreneurs will be needed to embrace a new economic development paradigm in rural America. Private entrepreneurs are very good at seeing the opportunities that lie in the emerging sectors described above.

Given the right support, these entrepreneurs will create the new ventures that can transform the rural economy. It is the job of enlightened community leaders to become civic entrepreneurs—to recognize what is driving your local community, to think innovatively and creatively about promising new sectors, and to implement strategies that encourage and support the development of private entrepreneurs.

Rural America has been, and will continue to be, challenged by economic trends and changes. However, armed with information about the rural economy, community leaders can embrace a new way of thinking about economic development and begin to develop and implement strategies to create supportive entrepreneurial environments in their rural hometowns.

Additional Resources

All that has been written about rural America could fill a large library. Few of us have the time to become true scholars of rural America. However, if you would like to deepen your understanding just a bit more we suggest the following five resources:

Your Field Guide to Community Building by Vicki Luther and Mary Emery, Heartland Center for Leadership Development. This is a practical resource for any community leader. It covers the basics of working at the community level. Copies of the guide can be purchased at www.heartlandcenter.info.

Community Economics: Linking Theory and Practice by Ron Shaffer, Steve Deller and Dave Marcouiller. These guys have it right and this book provides just what it says–a link between theory and practice. Blackwell Publishing.

Rural Communities: Legacy and Change by Cornelia Butler Flora and Jan L. Flora with Susan Fey. Jan and Neal Flora have defined community civic capacity and provided great insight into what makes communities successful. This book captures decades of learning and insights. Westview Press.

The Failure of National Rural Policy by William P. Browne. Ill-conceived and poorly executed national policy has played the central role in the decline of rural America. This book does a sound job of capturing this element of important history. Georgetown University Press.

Rural Development in the United States: Connecting Theory, Practice, and Possibilities, by William A. Galston and Haren J. Baehler, is a classic. Island Press.

The Center has more resources and can provide additional assistance to you as you support entrepreneurs in your community. To access Center Resources, click on our logo.